ECONOMIC ASPECTS OF THE WAR 



By EDWIN J. CLAPP 



THE PORT OF HAMBURG 

(Second Printing) 12mo, Cloth Binding, 

Gilt Top, 220 pages, 19 Illustrations 

PaicE $1.50 Net 



THE PORT OF BOSTON 

(In Preparation) 



ECONOMIC ASPECTS 
OF THE WAR 



NEUTRAL RIGHTS, BELLIGERENT CLAIMS 

AND AMERICAN COMMERCE IN 

THE YEARS 1914-1915 



By 
EDWIN J. CLAPP 

Professor of Economics, New York University 




New Haven: Yale University Press 

London: Humphrey Milford 

Oxford University Press 

MDCCCCXV 



\N 



z 






Copyright, August, 1915 
By Yale University Press 



First printed August, 1915, 12,500 copies 



SEP 14 1915 



1 CI. A 4 1 8 3 9 



x//^ 



PREFACE 

This story of international lawlessness in the first 
year of the Great War is the outgrowth of a public 
lecture given at New York University in March, 
1915. 

The book was written because it seemed to me that 
we Americans were paying too much attention to the 
affairs of belligerents and too little to our own. 

After all, we are by no means untouched by the 
war. It imperils not only our present material inter- 
ests but also neutral rights upon which the material 
interests of all peaceful nations in the future depend. 

The neutral world is watching for us to realize 
and assert it's rights and ours. Hence this statement 
of what those rights are and this record of what 
seems to have occurred to threaten them. 

Edwin J. Clapp. 
University Heights, 
New York, 
August, 1915. 



?? 



CONTENTS 



Chap. I. 



Rights of Neutrals under International 
Law ....... 



Elements of the present situation. 
Nature of international law 
Its sanctions 

The necessity for a compulsion 
War and neutrals. Meaning of " 
Contents of international law 

Declaration of London 
Violations of international law. 
Mine laying 

"Modifications" of Declaration of 
Orders in Council 
Changes in contraband list 
Blockade 
Need of return to legal limits now 



1-18 





1 




2 




3 


'economic war" 


4 




6 


• 


7 




8 


f London . 


9 




11 




13 




15 




16 



Chap. II. The August Order in Council and its 
Effect on the Export of Foodstuffs 

Our right to ship food to Germany 

Especially as denned in Declaration of London 
Britain's abolition of that right. 

The August 20 modification of the Declaration of 
London .... 

Effect on direct trade with Germany 
Effect on indirect trade with Germany 
Other measures. 

Pressure on steamship lines 
Re-export embargoes of neutrals 
Netherlands Oversea Trust 
Movement of foodstuffs markets. 

Grain ...... 

Flour 

Our loss not of money but of principle . 



19-36 

19 
21 



23 

24 

27 
28 
29 

32 
34 
36 



Vlll 



CONTENTS 



Chap. III. Foodstuffs under International Law 
The October Order in Council . 

Our proclamation of our rights, August 15 
Precedents in international practice, especially Eng 

land's ..... 

The October Order in Council .... 

Retention of harsh features of August Order 

Forbidding shipments "to order" . 
Effect on strictly neutral trade 
Operation of October Order. 

Case of the four meat steamers . 

Compelling neutrals to place re-export embargoe; 

Trade discouragement through detention policy 
Our protest December 26 . • 

British answer January 7 . 

Intimation of complete ban on our exports . 

Chap. IV. The "Wilhelmina. A Test Case . 

Origin and method of the shipment 

Reception by British public 
British measures to stop the cargo. 
The excuse. 

German confiscation of grain and flour . 
The action. 

Grain and flour declared contraband 
Wilhelmina seized ..... 
Disposal of Wilhelmina case. 

Our note of February 15 and its answer 
Prize court proceedings .... 
New Order in Council .... 
Our objection to the handsome settlement . 

Chap. V. The Blockade ..... 

Its alleged cause: the German War Zone Decree 
That Decree ...... 

Our protest and Germany's answer 

Our attempt to reconcile England and Germany 
Answers of the belligerents .... 



CONTENTS 



IX 



The Blockade. 

Its announcement . 

Our protest of March 5 
Britain's answer of March 15 
Our protest of March 30 
British answer of July 23 . 



83 
84 

85 
87 
89 



Chap. VI. 



Some Effects and Aspects of the Block 
ade ..... 



Effect of the March 23 Order in Council . 
The meat seizures ..... 

April 13 prize court proceeding . 

May 21 statement of Foreign Office 
Statement of packers 

Negotiations between packers and British 

"Caveat" note of July 15 

British answer ..... 
British control over provisions for neutrals 
The solution. 

Blockade the key to our difficulties 

The dangerous precedent created . 

The question of our neutrality . 
Declared stand of two members of British Cabinet 

Chap. VII. Starting the Cotton Movement . 

Introductory. 

Importance of cotton exports for the South . 
Situation in fall of 1914 
The movement to England. 
Delay in ships and financing 
Light movement in early months . 
The movement to Germany. 

Preponderance of indirect shipments . 

The drop in cotton prices, because of slack German 

movement .... 
Difficulties of exporting. 
To Germany direct. 

Vessels of other neutrals 



93-111 

93 
94 
94 
95 
97 
98 
99 
100 
101 

103 
105 

107 
108 



112-139 

112 
113 

115 
116 

116 

118 



120 



CONTENTS 



Existing American vessels 

Insurance. 
Acquired American vessels . 
Dacia ..... 

Ship purchase bill 
To Germany indirect. 

Export embargoes of adjacent neutrals 
Contraband rumors 
Solution of the difficulty in German exports 
False measures .... 

The measure that worked 

British non-contraband declaration 
Taking the credit .... 



122 

124 
125 

127 

131 
132 

136 
136 
137 
138 



Chap. VIII. Stopping the Cotton Movement . 



. 140-168 



Remaining hindrances, even after British declaration. 

More export embargoes 

X-raying cotton bales .... 

North Sea declared a war zone (mined) 
British purchases at low prices 
Good effect of German takings on market 
Preparation by England to stop the movement to 
Germany. 

Contraband talk 

German War Zone declaration 

British retaliation planned . 
The blockade 

Its March modification 

Effect of Order on neutral trade 
Effect of blockade on cotton prices 
Inefficacy of blockade measures, regarding Ger 
many. 

Effect on ammunition makers 

Effect on industries ..... 
Ill effects of blockade on the South. 

Past 

Future ........ 

The solution ........ 



140 
141 
141 
144 
147 



147 
149 
150 
152 
152 
155 
161 



161 
163 

165 
165 
166 



CONTENTS 



Chap. IX. Copper as Lawful Commerce . . . 169-187 

Introduction. 

Importance of the export field for our copper . 169 

Reduction in output at outbreak of war . . 170 

Large takings of England ..... 172 

Difficulties of shipping to Germany. 

Copper under the Declaration of London . . 172 
Necessity of shipping via neutrals. 

Nothing in August ...... 173 

Via Holland in September .... 173 

Seizures by England ..... 174 

Copper made conditional contraband . . 175 
Violations of law by those seizures. 

Declaration of London .... 175 

"Continuous voyage" cases . . . 176 

August 20 Order in Council .... 180 

Via Italy and Scandinavia in October and 

November ...... 181 

Seizing the copper ..... 182 

Copper made absolute contraband . . . 182 
The propriety of ranking copper as contraband. 

Its immunity under Declaration of London . . 183 

Great Britain's previous position .... 183 

Effect on copper industry ..... 186 

Chap. X. Copper as Contraband of War . . 188-208 

Long delays of detained neutral cargoes . . . 189 

Sir William Scott thereon 190 

The November British proposal to direct the copper 

trade 192 

Gardner's visit and its failure .... 193 

Confining neutrals to their average annual quotas . 194 

Italy's need for more copper than usual . . 194 

England's own example ..... 195 

Forbidding neutral shipments "to order" . . 197 

Our December note of protest ..... 200 

Answer from England, on January 7 and February 

10 201 

Final surrender of copper trade to Admiralty . 202 

Italy's copper famine ...... 203 



Xll 



CONTENTS 



Advantage enjoyed by British dealers . 
American producers sign the Agreement 
Efficacy of the "economic pressure" as regards copper 
Effect on Germany 
Effect on United States 

Chap. XI. The Export Situation . 

Growing balance of trade 

Its direction .... 

Items of large growth in exports . 

The Seven Groups 

Decrease in other exports 
"Spotty" export situation 

Chap. XII. The Import Situation . 
England's use of her economic power 
The commodities affected 

Rubber ..... 

Wool . . 

Tin 

Chap. XIII. The Import Situation (Continued) 
Potash ..... 

Use. Present status . 
Dyestuffs .... 

Our dependence on Germany 
Other imports 
Prospective loss of Federal revenue 



204 
205 
206 
206 
208 

209-220 
210 

210 
212 
217 
217 

218 

221-238 

221 
224 
225 
234 
238 

239-253 

239 

239 
244 

245 
252 
261 



Chap. XIV. The Practicability of Starving Ger- 
many ...... 

Foodstuffs . . . . . 

The fallacy 

Why it arises ....... 

Germany's former measures to remain self-support- 
ing. 
Tariff protection ...... 

Intensive agriculture ..... 

Resulting independent food supply . 



264-290 
265 

265 
267 



270 

271 
272 



CONTENTS 



xm 



Germany's present measures . 

Confiscation of grain and flour . 
Bread tickets 

Treatment of live stock and fodder 

The new harvest 
The smuggling trade ... 
Fertilizer ..... 

Oil 

Possibility of permanent substitution 

products 
England's trust in the "attrition policy" 
Our need to resume trade with Germany 



problems 



for our 



273 
274 
275 
276 
279 
281 
284 
286 

287 
290 
290 



Chap. XV. War Orders and the Power They Place 
in Our Hand 

Importance of artillery in this war . 

Large orders placed in America 

Official approval of State Department 

German complaints of these exports 
Bernstorff on aeroplanes 
German note of February 16 
Bernstorff's ammunition memorandum 

Our right to ship arms . 
Germany's policy in the past 
Our obligations under neutrality laws 
The argument on humane grounds 
Our material advantage from the orders 

Our right to cease these arms exports. 
Hague Convention supporting it . 
The use of such action: 
To compel return to the limits of law 



291-309 

291 
292 
294 
294 
. 296 
298 
298 
301 
301 
301 
302 
305 

306 

307 



APPENDIX 

President Wilson's Neutrality Appeal 
British Orders in Council. 

Order of August 20 

Order of October 29 

Order of March 11 . 

Order of March 23 . 



311 

312 
313 
314 
316 



xiv CONTENTS 

American note presented jointly to the belligerents in 
February, suggesting modifications of the sever- 
ity of war at sea ...... 316 

Letter of Jefferson to Pinckney in 1793 . . . .318 

Minority Report of the Committee on Merchant Marine 

of the United States Chamber of Commerce . 321 

Declaration which American Associate Members of Liver- 
pool Cotton Exchange were asked to sign . . 322 

British detentions of American Copper exports to 

neutrals, autumn, 1915 ..... 323 

Copper agreement of United States producers with 

British Admiralty 324 

Statement issued by British Embassy in Washington in 

May, telling American exporters how to operate 325 

Circular letter from United States Trade Advisers sent 

to American importers 327 



ECONOMIC ASPECTS OF THE WAR 



CHAPTER I 

Rights op Neutrals under International Law 

Before this war had been long in progress most of 
us learned for the first time the real nature of inter- 
national law. The word "law" had tricked us into 
thinking of something clearly defined and accepted 
by those to whom it applied, and something backed 
by force to compel obedience. 

Now we learn that what we considered inter- 
national law consists mainly of a great body of 
precedents of different nations, some of them conflict- 
ing. These precedents represent certain immunities 
granted by belligerents to the commerce of neutrals 
in time of war. To be sure, the immunities are an 
advance over the days when a belligerent proceeded 
like a pirate against lives and property on ships 
trading with the enemy. But the advance, when we 
consider it closely, is seen in no way to have kept 
pace with the growth of the vast interests it was 
designed to protect. International law at the best 
is an inadequate recognition of the rights of those 
who keep the peace at the hands of those who break 
it. 

Yet even such law as there was has been dis- 
regarded. Blinded by self-interest, the belligerents 
have inaugurated a return to the practices of piracy 



2 ECONOMIC ASPECTS OF THE WAR 

from which this law has been designed to save us. 
When we turn to a power sufficient to compel obedi- 
ence to the law, we find that behind it there is nothing 
but international morality, the public opinion of the 
world. 

Especially in the last fifteen years this public 
opinion has been enlightened as to the great interests 
dependent upon an uninterrupted flow of peaceful 
commerce in war times. True, in the process of pub- 
lic enlightenment there has been more emphasis upon 
the horrors of war in general. The strongest of 
the forces forming public opinion on international 
matters has been the peace movement. Today we can 
say that more good might have been accomplished if 
the greater emphasis had been not upon preventing 
all war but upon confining its damage to those who 
fight. But a valuable by-product of the peace move- 
ment has been the spread of information on the rights 
of peaceful nations compared with belligerents and 
the need to extend those rights, not restrict them. 

It was hoped that in time of war this international 
public opinion as to the rights of neutrals would 
exercise a strong moral force upon the belligerents 
to stay within the limits of law. That is, it was ex- 
pected that the conscience of belligerents, fearing the 
disapproval of neutrals, would compel respect for 
the established order of things. 

We were doomed to disappointment. The dis- 
approval of neutrals has not been lacking, expressed 
most clearly in the protests of their governments 
directed to both belligerents. But a belligerent con- 



RIGHTS OF NEUTRALS 3 

science, that is, fear of this disapproval or even any 
large respect for it, is lacking in the parties to the 
war. 

Perhaps it was too much to expect that inter- 
national morality alone would suffice to give sanction 
to international law. Within national boundaries we 
do not trust to morality alone. The prime interests 
of life and property are safeguarded by definite, 
clearly understood laws, accepted by all, and backed 
by force. Morality supplements force and does not 
supplant it. Withdraw the force of the law in any 
nation and its observance would disappear. Could 
we expect international morality alone to be any 
more able to supplant force in compelling observance 
of international law? 

Whatever our expectations were, regarding the 
binding force of morality upon warring nations, we 
can have them no more. It is necessary to find some 
form of peaceable compulsion that will bring the bel- 
ligerents back to the limits of law. Everyone recog- 
nizes the necessity of doing this at the end of the war. 
As a sequel to the peace, men are planning a new sort 
of international law with sharp power to enforce it. 
But the return to legal limits must be now, in the 
midst of the war. For neutrals to forfeit their rights 
will be a victory for the forces of international im- 
morality and disorder. Respect for international 
law will be permanently weakened. 

Moreover, no one can with certainty say that the 
end of the war will see established the formal system 
of international law of which we dream. It may be 



4 ECONOMIC ASPECTS OF THE WAR 

that this law will still be largely a matter of prece- 
dents, enforced by nothing stronger than the moral- 
ity of nations. What security will there be in our 
relations if those precedents, hard won in the past, 
are now effaced and if that international morality 
notoriously proves unequal to its task? 

Apart from this matter of principle, the great 
interests of trading nations, injured by the actions 
of belligerents, and the constant peril to innocent 
^"ves upon the high seas, both call for a return to 
freedom of neutral trade and travel now, before the 
end of the war, whose end we cannot foresee. Now 
is the time to put an end to the sacrifices of life and 
property demanded of those who choose to remain 
aloof from the conflict. 

From the very beginning this war went beyond 
the limit of military and naval actions. It became 
an "economic war"; namely, a process of interrupt- 
ing the flow of commerce between neutrals and bellig- 
erents and even between neutrals themselves. The 
purpose was to deprive the interrupted belligerent of 
necessities of military, industrial and civil life and 
so bring upon the enemy nation "pressure" sufficient 
to end the war. 

But an economic war of this sort is also an eco- 
nomic war against neutrals, for the same pressure 
is brought to bear upon them as upon the belligerent 
attacked, perhaps even greater pressure. It may be 
that the belligerent can find or develop a substitute 
for the neutral's product more easily than the neutral 
can find a substitute for the belligerent's market. 



RIGHTS OF NEUTRALS 5 

There are two parties to all trade. It is impossible 
to interrupt the trade without striking them both. 

The economic war began in August, 1914. Soon 
after the outbreak of the military war England's sea 
power drove German naval vessels from the ocean. 
Since then, Germany's navy upon the high seas has 
been unable to do more than carry on a sort of 
guerrilla warfare beneath the waves. England, after 
driving German cruisers from the Atlantic, proceeded 
to inaugurate measures designed to withhold from 
Germany the importation of most commodities th 
come to her by sea. Germany retaliated by a sub- 
marine campaign that endangered not only neutral 
property but also neutral lives on vessels sailing to or 
from England. 

Through this policy of action, retaliation and 
counter-retaliation the seas have become a battlefield 
where the commerce and citizens of neutral countries 
venture at peril of capture or sudden destruction. 

This book, dealing with the effect of belligerent 
violations of neutral trade rights upon the agricul- 
ture, industries and commerce of the United States, 
could be written about any nation now at peace. 
Our wrongs and losses are merely types of what has 
been forced on other neutrals as well. The sum of 
these wrongs and losses is an argument demanding 
that nations which plan to work and trade be led to 
dismiss now, and for all time, the aggressions of those 
that plan to devastate and slay. 

It happens that the United States is the only great 
power remaining neutral, the only force today that is 



6 ECONOMIC ASPECTS OF THE WAR 

able to assert the rights of the world of peace. If we 
fail in the objects we seek, in the negotiations we 
carry on with both belligerents, the hope of all 
neutral nations is gone. 

It is worth while briefly to review that body of 
neutral rights which we called international law and 
the successive measures by which those rights were 
abolished. 

By common consent the seas are the public high- 
ways of nations ; outside a zone three miles from 
shore they are not the domain of any one nation. 
They belong to peaceful commerce, not to belliger- 
ents who roam their surface seeking to destroy each 
other. As a remnant of marine barbarism, a bellig- 
erent has the right, if it has the power, to capture 
or drive from the ocean the merchant vessels of its 
foe. To the extent of its command over the sea, a 
belligerent may prevent contraband of war from 
reaching an enemy in any vessels ; and, if capable of 
blockading the enemy's seacoast, may put a stop to 
all ocean commerce of the blockaded country. Under 
international law, these were the limits and conditions 
of interfering with commerce between neutrals and a 
country at war. 

Only within much narrower limits, according to 
modern conceptions of international law, can a 
belligerent interfere with commerce between neutrals 
themselves. This commerce may be interrupted only 
when it consists of contraband of war — the actual 
tools of fighting — demonstrably in transit to enemy 
territory. 



RIGHTS OF NEUTRALS 7 

These are the rights of commerce on the seas. The 
rights of travel are as well understood. Though a 
belligerent may capture and in certain cases destroy 
a merchant vessel of the enemy, this may not be done 
without providing for the safety of crew and pas- 
sengers. All passengers on neutral vessels, wherever 
bound, are immune from interference, excepting mem- 
bers of the armed forces of the enemy traveling home. 

The laying of mines at sea is not permitted except 
for defensive purposes and then only in the terri- 
torial waters of the warring power that lays them. 

With these main exceptions, which are burdensome 
enough, the sea must be free for the uses of commerce. 

While this is international law as generally under- 
stood, it has not been in form to give nations a sense 
of security. The law is mainly in the form of prece- 
dents, such as proclamations of belligerents in pre- 
vious wars, decisions of the prize courts of captors, 
and treaties between individual nations. Some of 
the precedents of different countries are conflicting. 
Therefore civilized powers have made several at- 
tempts to reduce the law of the sea to a form accept- 
able to all and accepted by all. 

One such attempt resulted in the brief Declaration 
of Paris, adopted as a sequel to the peace negotia- 
tions following the Crimean War. More recently in 
the Hague Conferences efforts were made' to form 
treaties which all nations were to sign. Most impor- 
tant for our present purposes is the Declaration of 
London. The British Government in 1909 called the 
London Conference to codify the law of the sea. All 



8 ECONOMIC ASPECTS OF THE WAR 

the leading nations took part. The result was the 
Declaration of London, signed by all national repre- 
sentatives who attended the Conference. 

It is true that not all the Hague Conference 
agreements, called Conventions, were accepted by all 
civilized nations. It is true that for reasons partly 
selfish and partly technical the Declaration of London 
was not ratified by many home governments and so 
did not become officially binding upon them. But it 
was signed by the representatives of all great powers. 
The Preliminary Provision reads : 

"The Signatory Powers are agreed that the rules 
contained in the following Chapters correspond in 
substance with the generally recognized principles of 
international law." 

Hence it is that neutrals felt that the Declaration 
of London was morally binding. Hence it is that 
nations at peace looked forward to seeing the judg- 
ment of civilized nations as to the rights of neutrals 
upon the sea, expressed particularly in the Declara- 
tion of London, proclaimed as sea law by all belliger- 
ents at the outbreak of the war. We were dis- 
appointed. 

The disregarding of legal limits was first in evi- 
dence when either Germany or England began laying 
floating mines upon the high seas, forbidden in a 
Hague Convention. Each took the alleged action of 
the other as the excuse for retaliation. Because of 
these floating mines in the North Sea, literally scores 
of vessels were lost, mostly belonging to the Scandi- 



RIGHTS OF NEUTRALS 9 

navian countries or Holland. Three American ves- 
sels were included, the Greenbriar, Carib and Evelyn. 
Because of the danger of mines, ocean freights and 
war risk insurance rates became a heavy burden on 
shippers and buyers and, in the case of some com- 
modities, became prohibitive of commerce. A pall of 
uncertainty and fear was thrown over the commercial 
world. 

Unfortunately, as it would seem in the light of 
later events, America refused to join the North Sea 
neutral countries in a protest against the mining of 
the North Sea. Such action might have made more 
effective the protest of all neutrals against the later 
German War Zone about the British Isles. 

Yet the effect of mines upon the high seas was 
small compared with the paralysis of trade effected 
by a practical abolition of the rights of neutrals to 
trade with Germany and a severe restriction of their 
right to trade with each other. England brought this 
about by certain amendments to international law 
through its Orders in Council. Germany, with her 
retaliatory submarine warfare, designed the same 
paralysis of English trade. That the object was not 
attained is due solely to the fact that German sub- 
marines are less omnipresent and less able to intercept 
all trade than British cruisers are. 

The exact process of this abolition of the freedom 
of commerce is easy to follow. 

At the very opening of the war the American 
Secretary of State, with a view to protecting neutral 
rights while allowing the belligerents all lawful free- 



10 ECONOMIC ASPECTS OF THE WAR 

dom of action, suggested to them that they adopt 
during this conflict the unratified Declaration of 
London as their code of action towards neutrals. 
Germany and Austria agreed. Russia and France 
delayed their answer until they could hear from 
, Great Britain, and then joined that country in its 
; policy announced by the Order in Council of August 
20, 1914, accepting the Declaration of London with 
modifications. 

The modifications were subversive of the principles 
of the Declaration to which they were attached. 
J These modifications, supplemented by an unexampled 
/ extension of the British contraband list, and finally 
by what our government calls an illegal blockade, 
have been England's method of exercising economic 
pressure upon Germany and, necessarily, upon all 
neutral nations that trade with her. 

In the Declaration of London the articles classed 
as absolute contraband of war — that is, articles which 
Great Britain might properly shut out of Germany 
, altogether — were restricted to the actual tools and 
equipment of fighting nations. Conditional contra- 
band was a more comprehensive list, including such 
merchandise as food, clothing, coal, harness and 
saddlery, horseshoes and barbed wire. These articles, 
capable of direct use by the armed forces of the 
enemy, might be stopped only if the interfering bel- 
ligerent could prove that they were destined for those 
forces. Finally, the Declaration specified a list of 
free goods, articles which might not be molested be- 
cause only distantly related to warfare, necessary 



RIGHTS OF NEUTRALS 11 

to the civilian population, and contributing a very 
important portion of the commerce of peaceful 
neutrals. Such articles were cotton, wool, hides and 
skins, and rubber. 

This was law as codified in the Declaration of 
London. The British Order in Council of August 
20 had the effect of adding the conditional contra- 
band list (food, clothing, etc.) to the absolute list, 
by decreeing that conditional contraband would be 
presumed to be moving to the German military, and 
hence subject to capture, if the goods were "con- 
signed to or for an agent of the enemy state or to or 
for a merchant or other person under control of the 
authorities of the enemy state." That is, goods 
could be consigned to no one in Germany ; they could 
not be shipped to Germany at all. It is obvious that 
after this action any addition to the British condi- 
tional contraband list was as complete a ban on com- 
merce as an addition to the absolute contraband list. 
The two henceforth were identical. 

This action stopped our direct trade with Ger- 
many. It might appear that goods on the free list 
could still move. Some of them did move, from free 
to contraband. People feared to ship the others lest 
they should be so listed while ships were on the ocean, 
and the goods made subject to seizure. Practically 
nothing has been shipped to Germany from this 
country but cotton, and it was not shipped until 
December. In belated response to the insistence of 
southern senators and of American business inter- 
ests which had found themselves gravely embarrassed 



12 ECONOMIC ASPECTS OF THE WAR 

by the cessation of cotton shipments, Great Britain 
finally made a clear statement that this particular 
commodity would not be considered contraband. 

So much for direct trade with Germany. There 
was still a method by which we should have been able 
to export our goods and discharge our neutral obli- 
gations to trade with Germany as with England. 
We might have carried on this trade via neutral ports 
like Rotterdam or Copenhagen, from which the goods 
might have been shipped to Germany. The Declara- 
tion of London allows a belligerent to interfere with 
a shipment between two neutral ports only when it 
consists of absolute contraband for enemy territory. 
Conditional contraband so moving may not even be 
suspected. The Order in Council changed this. It 
extended the new intention of capturing conditional 
contraband to goods moving to Germany even 
through a neutral port. And, as explained, condi- 
tional contraband was seizable if destined to anyone 
in Germany; it was not conditional but absolute. 

The British action, besides stopping our trade with 
Germany, barring only a certain amount of indirect 
trade carried on with much difficulty and danger, 
subjected to grave peril our commerce with other 
neutrals. The British contraband lists were extended 
so rapidly that soon almost no important article of 
commerce with neutrals was free from seizure by 
England, who suspected everything on these lists as 
being of possible German destination. The shipper 
to a neutral country then had the prospect of a 
British prize court passing judgment as to whether 



RIGHTS OF NEUTRALS 13 

shipments were destined for Germany and, in the case 
of an affirmative judgment, whether any compensa- 
tion should be paid the shipper, or his cargo simply 
confiscated. The uncertainty was a risk against 
which no one could insure. 

As for the British contraband lists, a few instances 
will illustrate how they grew. On September 21, 
copper, lead, rubber, hides and skins were added ; on 
October 29, motor vehicles, motor tires, mineral oil 
and leather. On December 23, naval stores and 
cottonseed oil went on the list. On March 11, raw 
wool was banned. The Germans have retaliated and 
published a contraband list containing articles that 
have nothing to do with war, like lumber and flax. 

Our protests against the British August 20 Order 
in Council resulted in the substitution of an Order 
dated October 29. But when we came to observe the 
operation of the October 29 Order, we found that it 
did not lift the ban on our trade with Germany either 
direct or via neutrals, and that it added to the exist- 
ing difficulties of our trade with neutrals a prohibi- 
tion of shipments "to order." This prohibition dis- 
located the ordinary methods of foreign trade. Our 
protest to England of December 26 against inter- 
ference with our trade with Europe failed to secure 
any modification of that interference. 

At last a real test was made of the possibility of 
provisioning Germany. In January a St. Louis firm 
tried to get a cargo of foodstuffs to Germany on the 
American steamer Wilhelmina. The provisions were 
consigned to no one in Germany but to a member of 



14 ECONOMIC ASPECTS OF THE WAR 

the American firm who went to Hamburg to receive 
the cargo and distribute it to the civilian population. 
The British stopped the vessel. Unable to find any 
law for continuing the detention, they made law 
./ through a new Order in Council, enabling England 
to requisition, without trial, the cargo of any neutral 
ship brought into port. The Wilhelmina's cargo 
was so requisitioned. 

On February 4 Germany, claiming that its act 
was a reprisal against an unlawful British attempt 
to starve a civilian population, declared the waters 
around the British Isles a War Zone where British 
merchant ships would be destroyed by German sub- 
marines — if necessary, without search — and where 
the submarines might endanger neutral vessels by 
mistake. Neutrals were warned to keep away. It 
was stated that it might be impossible to provide for 
the safety of passengers or crews of the British 
steamers destroyed. 

When the War Zone was announced, our govern- 
ment recognized the danger, and addressed a sharp 
note to Germany, warning that country to be careful 
not to strike at American vessels or American lives. 
At the same time, we seemed to recognize in a degree 
the German point of view; so we sent a joint note to 
Britain and Germany suggesting that Britain give 
up its policy of stopping foodstuffs for German 
civilians, that Germany abandon its submarine war- 
fare, and that both belligerents desist from mining 
the high seas. 

With certain reservations Germany accepted the 



RIGHTS OF NEUTRALS 15 

proposal. Great Britain rejected it and, indeed, 
instead of accepting, proceeded to more radical meas- 
ures than before. On March 1, stating its action 
to be a retaliation against the submarine war and 
other alleged breaches of international law by the 
Germans, England instituted a "blockade" of Ger- 
many. The authorities at London announced that 
all vessels carrying cargoes to or from Germany, 
whether direct or via neutral ports, would be sub- 
ject to seizure. This was the culmination of the 
British lawlessness. The culmination of the German 
lawlessness was the Lusitania horror. 

The British "blockade" terminated our cotton 
trade with Germany, virtually the only trade that 
had moved. Whatever even of cotton thereafter 
found its way to Germany was involved in a smug- 
gling operation. The third largest buyer from 
America became as distant from us as another world, 
barring some dangerous, indirect trade. Moreover, 
all our shipments to European neutrals adjacent to 
Germany now became tainted with suspicion and 
detention. Scores of cotton cargoes bound for 
neutrals have been held up in British ports. 

For the first time American importers of Ger- 
man goods saw their supplies endangered; until 
March 1, the flow of commerce from Germany had 
been unhindered. Our Federal Government faced a 
loss of $20,000,000 per year in customs revenues 
levied on German goods. 

The most striking circumstances in this extraor- 
dinary situation is the fact that Great Britain has 



16 ECONOMIC ASPECTS OF THE WAR 

at no time maintained a genuine blockade. British 
warships, fearing submarines, dare not undertake a 
close blockade of German ports. The Admiralty 
merely intercepts all traffic passing by Scotland or 
through the English Channel. Thus the blockade 
does not bear equally on all neutrals, for Scandina- 
vian countries ship undisturbed to German Baltic 
ports, from which American products are barred. 

This whole process of gradually damming the 
currents of trade to and from one of the members of 
the comity of nations has been attended with huge 
financial loss to the neutrals. More important than 
this, these neutrals, because the British operations 
have been contrary to the accepted interpretations of 
international law, have been put in a position where 
they ask themselves seriously whether, without violat- 
ing their neutrality, they may lawfully continue to 
trade with one belligerent which unlawfully prevents 
them from trading with another. Above all, they 
question the possibility of silent acquiescence in the 
policy of both belligerents in abandoning decent 
restraints in their treatment of the lives and property 
of neutrals. 

The time has arrived to revive the restraints and 
reassert international law and morals. 

The lifting of the British "blockade" will not 
suffice, for we neutrals should then find many of the 
products of peaceful industry each burdened with 
an individual blockade. That is, these products 
would be found included in the British contraband 
lists, with all that that means in the hindrance of 



RIGHTS OF NEUTRALS 17 

trade between neutrals as well as between a neutral 
and a belligerent. If the "blockade" were lifted and 
the October 29 Order in Council and the British con- 
traband lists kept in force, the relief to neutrals 
would be small. 

What we need is a code of law and morals so 
simple in its terms that the self-interest of neither 
belligerent can evolve a quibbling interpretation of 
it different from that which neutrals hold. In this 
code must be determined what may be contraband 
and what may not; and it must define the entire 
method of procedure against merchant ships at sea. 

There is no time now, in the midst of the war, for 
neutral nations to meet and devise such a code. The 
best we can do is to point to one already in exist- 
ence: the Declaration of London. Formed by the 
best legal talent of all nations, it is fair and it is 
clear. 

Along with the removal of England's illegal prac- 
tices against the goods of neutrals must go the 
removal of Germany's illegal practices against their 
goods and lives. Germany must restrict her swollen 
contraband list and likewise return to the Declara- 
tion of London. She must not use submarines 
against unresisting merchant vessels except to stop 
and search them in the approved legal way. Nor 
may English merchant vessels under any conditions 
be sunk until the safety of crew and passengers has 
been provided for. 

Floating mine fields must be removed by those who 
laid them. 



18 ECONOMIC ASPECTS OF THE WAR 

The following chapters are a review of the suc- 
cessive measures that led up to the present situ- 
ation, and the effect of those measures upon leading 
articles of our foreign trade and upon our neutrality. 
It will be shown that it is in America's power, as it 
is her duty, to restore international law on behalf of 
the neutral world. 



CHAPTER II 

The British August Order in Council and Its 
Effect on the Export of Foodstuffs 

The various measures taken to restrict the trade of 
neutrals are best reviewed in connection with a con- 
sideration of their effect upon the trade in foodstuffs, 
for it was foodstuffs against which most of these 
measures were aimed. 

For a belligerent to interfere with food moving 
over the sea to the civilian population of the enemy 
is contrary to our conceptions of international law — 
and contrary to the conception formerly insisted 
upon by Great Britain — unless such interference is 
accomplished by means of an effective blockade. 

Violation of the rights of trade means violation 
of the rights of both parties trading. In this par- 
ticular case, one party was Germany and one party 
was the United States. We are less directly inter- 
ested in the infringement of the right of German 
civilians to receive food than in the infringement of 
our right to ship it. Thomas Jefferson even tells us 
that to send food to one combatant and forego our 
right to send food to the other is a clear breach of 
neutrality.* 

* For his letter to Pinckney, see Appendix, p. 318. 



20 ECONOMIC ASPECTS OF THE WAR 

From the early days of August, 1914, England 
attempted by means lacking all legal recognition to 
shut off the movement of grain, flour and provisions 
to Germany. The frank object of the action was to 
bring such pressure to bear upon the entire people 
of Germany that it would sue for peace. In March 
the "attrition" campaign was given an outer appear- 
ance of legitimate practice by what is generally de- 
scribed as a blockade of the German coast, but what 
is in reality nothing more than an indefinite extension 
of the law of contraband. 

The control of England over the food supply of 
the nations of the world was exercised at once after 
the declaration of war. Britain ordered to her own 
ports every British steamer on the seas then carrying 
foodstuffs to Europe. Their cargoes were unloaded 
and sold in the British market, which became glutted 
with grain. English vessels were carrying most of 
the world's trade. The diversions not only threw 
into the British market all German-bound grain, but 
also all neutral-bound grain in British steamers, and 
assisted the government materially in exercising 
pressure upon the neutral countries to comply with 
certain policies of the British Ministry which will 
require later attention. 

After this initial measure to get control of grain 
that might be moving to Germany even via neutral 
countries, the British Government, in its August 20 
Order in Council, altered the status of foodstuffs in 
international trade in war time. This alteration took 
the form of a modification of the Declaration of Lon- 



THE AUGUST ORDER IN COUNCIL 21 

don, which England by that Order "accepted" as its 
code of naval warfare, and with whose terms we are 
already familiar. 

It is recalled that the Declaration classified articles 
of commerce as absolute contraband, conditional 
contraband or free. Absolute contraband might be 
captured if moving to an enemy either in direct trade 
or via neutral countries. Conditional contraband 
might be captured if moving direct to the enemy's 
country, provided it could be proven destined to the 
enemy's armed forces. The destination of conditional 
contraband might not be questioned if it were moving 
to the enemy via a neutral ; that is, conditional con- 
traband so moving would be immune. Goods on the 
free list could move unhindered to the enemy's coun- 
try in either direct or indirect trade. Goods from the 
enemy's country might not be stopped except by an 
effective blockade. — Foodstuffs were conditional 
contraband. 

Translated into terms of the present war, the 
Declaration prescribed that no interference should 
occur in trade between the United States and Hol- 
land, or Scandinavia, except in the case of ships 
which could be proven to carry absolute contraband, 
like arms and ammunition — with ultimate German 
destination. 

There could be no interference with the movement 
into Germany of such goods on the Declaration's 
free list as cotton, rubber and hides. There could 
be no hindrance of our export to Germany of con- 
ditional contraband like grain, flour and provisions, 



22 ECONOMIC ASPECTS OF THE WAR 

unless it could be proved by England that such ship- 
ments were destined for the German state or its 
armed forces. All foodstuffs moving to the civilian 
population of Germany were immune from capture. 
This question of army or civilian destination could 
not be raised if the food were moving to Germany 
via Holland or Scandinavia. 

The Declaration prescribed that there could be no 
interference in the movement of any goods from 
Germany to the United States unless in the event of 
an effective blockade of Germany. 

The things which by the Declaration of London 
Great Britain was obligated not to do gradually 
came to constitute a fairly good record of what she 
actually did. Step by step, the British. Admiralty 
interfered with the shipment to neutral countries of 
the most innocent goods, like cotton, requisitioning 
the cargoes for British purposes. Rubber was haled 
into the absolute contraband list ; hides were eventu- 
ally made absolute contraband. Neither food nor 
other conditional contraband was allowed to get to 
Germany, either by direct sailing or via neutral 
ports. Without the maintenance of a genuine block- 
ade, the export of all goods from Germany to the 
United States was finally made impossible. 

The first of these serious "modifications" of the 
Declaration of London, appearing in the British 
August 20 Order in Council, was a change in the 
Declaration's contraband lists. Aeroplanes were 
made absolute contraband; they were conditional in 
the Declaration. The change was unimportant in 



THE AUGUST ORDER IN COUNCIL 23 

itself but it introduced a policy that led to the 
greatest abuses. 

The second and more dangerous change was in the 
treatment of conditional contraband, which was law- 
fully liable to capture only if it could be shown des- 
tined to the enemy state or its armed forces. The 
obligation of proof, as always under international 
law, lay upon the captor. Such hostile destination, 
the Declaration specified, might be presumed if the 
foodstuffs were consigned to the enemy authorities or 
to a contractor in enemy country publicly known to 
supply the enemy ; or if the foodstuffs were sailing to 
a fortified place or base serving the armed enemy 
forces. That is, food ships consigned to ordinary 
merchants, not army purveyors, and sailing to com- 
mercial ports, were to be immune. As the Declara- 
tion says, "In cases where the above presumptions do 
not arise, the destination is presumed to be innocent." 

So much for the law regarding conditional contra- 
band. What c^ its British "modification" provide? 
It provided that destination for the hostile forces 
might be "inferred from any sufficient evidence" and 
experience proved that a mere suspicion in the mind 
of the British naval captain was sufficient evidence 
to detain ships. Moreover, in the new British-made 
law, destination for enemy forces was to be presumed 
if the goods were consigned to or for an agent of the 
enemy state or to or for a merchant or other person 
under control of the authorities of the enemy state" 

This "modification" made direct shipment of foods 
to Germany impossible. It abolished the difference 



24 ECONOMIC ASPECTS OF THE WAR 

between absolute and conditional contraband ; hence- 
forth neither could move. The prize court judges 
who must administer this new sort of international 
law were thereby prevented from allowing the civilian 
population of Germany to get foodstuffs from 
America. Such foodstuffs must obviously be shipped 
to someone. There is no one in Germany or any 
other land who is not either "an agent of the enemy 
state or a merchant or other person in control of 
the authorities of the enemy state." 

To be sure, the shipment might be consigned "to 
order," but events showed that the "evidence" would 
then be "sufficient" to "infer" destination to the 
enemy's forces. 

Yet this did not exhaust the sweep of the British 
change in international law as brought forth in the 
Order in Council of August 20. There still remained 
the possibility of provisioning Germany by shipping 
to Rotterdam, Copenhagen, Gothenburg or Genoa, 
and thence forwarding into Germany. Against inter- 
ference with conditional contraband so moving, stood 
the clear and unmistakable provisions of the Declara- 
tion of London. It read : 

"Conditional contraband is not liable to capture 
except when on board a vessel bound for territory 
belonging to or occupied by the enemy . . . and when 
it is not to be discharged in an intervening neutral 
port." 

If food is to be discharged in a neutral port, its 
destination is not subject to suspicion. 



THE AUGUST ORDER IN COUNCIL 25 

That is, applying the Declaration to the geog- 
raphy of the war, food bound for Germany, even if 
destined for military consumption, might lawfully be 
stopped only if shipped directly to Germany or 
Belgium, not if shipped to Germany through Dutch 
or Scandinavian ports. 

The reason for this last provision is simple. It 
would be a disturbance of trade sufficiently serious if 
doubtful foodstuffs moving from America direct to 
Germany were to be subject to the review of English 
judges on the often debatable question whether their 
destination were civil or military. It would become 
insufferable if international law should enable the 
British authorities to halt food consigned to Scandi- 
navian merchants and pass upon the dual question, 
first, the possibility of German destination, and next, 
the possibility of German army destination. 

Such power would enable the British judges to ruin 
trade between America and Scandinavia, upon the 
mere suspicion that some of the goods might be 
leaking through to Germany. Great Britain might 
use this annoying power over Scandinavia and Hol- 
land to force them to refuse to trade with Germany 
in articles of their own growth and manufacture. 
Therefore international law forbids England the 
right to suspect that shipments to neutral countries 
have German military destination. International law 
forbids England the right to guard against such 
indirect shipment, in the interest of the higher right 
of neutral trade which would thereby be exposed to 
the constant peril of a prejudiced interpretation. 



26 ECONOMIC ASPECTS OF THE WAR 

Experience has demonstrated the justice of these 
principles. And yet Great Britain in its August 20 
Order proceeded to disregard them. That Order 
provided that conditional contraband, if destination 
to enemy forces could be shown, was 

"liable to capture at whatever port the cargo is to be 
discharged." 

But, as we already know, destination to enemy 
forces was assumed if the goods were moving to 
Germany at all. Conditional contraband, such as 
foodstuffs, could not move to Germany via a neutral 
country just as they could not move direct. 

After barring neutral trade with Germany in all 
goods on the absolute and conditional contraband 
lists, England then increased these lists by adding 
to them articles that were either free or unclassified 
in the Declaration of London; such as rubber, 
copper, wool, hides and leather. Shippers feared to 
ship most goods not on the contraband lists, for fear 
they might be added to those lists. The result of all 
this was so severe that when the British began their 
"blockade," on March 1, the effect of it was not 
severely felt so far as traffic from America was con- 
cerned, excepting for cotton. Trade in most of our 
other important exports had already been stopped. 

It is necessary to bear these facts in mind because, 
six months after hostilities began, we find England 
solemnly declaring that, as a retaliation against the 
barbarities of German warfare, it may find itself 
obliged to institute reprisals and shut off the oversea 



THE AUGUST ORDER IN COUNCIL 27 

supplies of Germany, particularly food. Germany, 
in the light of history, has a better right to call her 
acts reprisals, for the British policy began on August 
20, 1914. 

Yet the action of England went further than the 
measures described. There was still a possibility that 
Germany might be supplied with food or other com- 
modities via neutral countries. This trade could 
move from America to merchants in Holland or Scan- 
dinavia, who would take delivery and later resell into 
Germany, attracted by the magnet of high prices 
prevailing there. 

Two means were taken to prevent this resale 
trade. In the first place pressure was brought to 
bear upon steamship lines, plying from the United 
States to European neutral countries, not to accept 
shipments of articles on the British contraband lists 
unless each such shipment were accompanied by a 
sworn statement by the shipper to the effect that 
the goods were, to the best of his knowledge and 
belief, for bona fide consumption in the neutral 
country. The steamship companies required such an 
affidavit because without it the vessel faced deten- 
tion by England while the uncertified shipment was 
being taken off. The fact that the neutral shipment 
was uncertified might then in the British prize court 
be "sufficient evidence" to prove it destined to the 
German military. 

In spite of this, there was a chance that some mer- 
chant in neutral Europe might deceive the American 
shipper who, after all, could give no guarantee of the 



28 ECONOMIC ASPECTS OF THE WAR 

ultimate destination of his goods, once they were 
delivered abroad. This contingency Great Britain 
met by inducing the European neutral governments 
to lay re-exportation embargoes upon articles in the 
British absolute and conditional contraband lists. 
That is, the neutrals were brought to pass laws penal- 
izing any citizen for reselling into another country 
these articles when imported. A neutral government 
which did not take this precaution might find that 
the absence of a re-export embargo upon goods was 
"sufficient evidence" to presume their destination to 
the German military and the neutral's own supplies 
from America would then be detained in England. 

The working of this system may be illustrated by 
the case of Holland. It is recalled that at the out- 
break of the war Great Britain at once summoned to 
home ports all British steamers carrying foodstuffs 
to Europe, and that the cargoes were sold in the 
English markets. For example, 770,000 bushels of 
wheat moving to Rotterdam were so diverted to Eng- 
lish ports. This wheat was needed by the Dutch 
millers. 

Holland was allowed to import no foodstuffs for 
herself, and before the end of August the government 
of that country was willing to enact any embargo 
and give any guarantees that Great Britain wanted. 
On August 23 a Dutch Minister of State announced 
this, in an interview published in London. On the 
following day the London Corn Exchange asked 
Sir Edward Grey for permission to export grain to 
Holland, since the people of that country were suf- 



THE AUGUST ORDER IN COUNCIL 29 

fering from a food shortage and would not be in a 
position to export any of the wheat to Germany. 
Sir Edward felt compelled to. refuse their request, so 
the London despatches said, on the ground that the 
strength of the German army on the Dutch frontier 
might be so great that Holland could not guard its 
own food supply. 

No doubt the strength of the German army was a 
factor that influenced Sir Edward's attitude. The 
strength of the Germany army on the borders of 
Holland did not decrease, yet he eventually did let 
food into Holland. If he had not, the Dutch would 
have starved as the Belgians did. But he waited not 
only until the Dutch Government laid an export em- 
bargo on foodstuff s but also until the Dutch Govern- 
ment agreed to act as the sole consignee of all contra- 
band and conditional contraband moving into 
Holland. Merchants importing grain, flour and 
provisions had to transmit to the government their 
demands and furnish it with funds and guarantees. 
The government in turn guaranteed to England that 
all of these imports would be consumed within Dutch 
borders. 

In the course of time the work of handling all 
imports for Holland became too heavy for the Dutch 
Government. Its departments were not equipped for 
commercial operations. Therefore under govern- 
ment auspices the Netherlands Oversea Trust was 
formed, composed of prominent Dutch business men. 
To it were henceforth consigned all goods on Brit- 
ain's contraband lists except grain, flour, petroleum 



30 ECONOMIC ASPECTS OF THE WAR 

and copper, which still could be sent only to the 
government direct. The Holland- American Line, the 
only regular steamers between America and Holland, 
bound itself to accept contraband goods only when 
consigned to the government or the trust.* 

Before this arrangement had been worked out in 
Holland and before the other European neutrals had 
taken measures satisfactory to Great Britain, they 
had all fallen into real want because of a restriction 
of their food imports. Throughout October the 
newspapers of Denmark, Norway and Sweden con- 
tained complaints about the detention of grain and 
food shipments by England. Under such conditions 
it is not strange that by early November those coun- 
tries had placed the most stringent embargoes on the 
export of food. It appears from our note to Great 
Britain of December 26 that the British Government 
had consented, in November, to be satisfied with the 
guarantees offered by the Norwegian, Swedish and 
Danish Governments as to non-exportation of "con- 
traband goods" when consigned to named persons in 
the territory of those governments, and that orders 
had been given to restrict interference with neutral 
vessels, so consigned, to verification of ship's papers 
and cargoes. 

* American exporters have never been enthusiastic about 
this arrangement. In the fall of 1914 they protested against 
the Dutch Government assuming a monopoly of flour purchases 
for Holland. It was claimed that this monopoly, in sup- 
planting the normal competition of Dutch dealers, prevented 
Americans from getting a competitive price for their flour. 



THE AUGUST ORDER IN COUNCIL 31 

No one in this country worried about the restric- 
tion of our grain and provisions trade with Germany 
and the adjacent neutrals. We shall see that, be- 
cause of the distress of the cotton planters, largely 
due to the impossibility of getting cotton started 
for Germany, there was a successful agitation in 
October to have the British ban taken off cotton. 
But no one was in distress about grain. 

It is true that in the first weeks of the war grain 
did not move out of this country, for reasons con- 
cerned with the general maritime situation. The 
uncertainty of the North Atlantic lanes, until Great 
Britain had cleared them of German cruisers, forbade 
vessels to venture out. As soon as England was alone 
in the North Atlantic, neutral and British vessels 
were safe from capture. Then there were initial dif- 
ficulties of insurance and especially of finance to be 
overcome. Bills drawn on foreign buyers were un- 
salable; for the London discount market, through 
which these would ordinarily be turned into funds by 
the American bankers, had temporarily broken down. 
Requisitioning of British vessels by the Admiralty 
served to reduce the tonnage available for carrying 
grain or any other commercial cargo. 

Large purchases of our grain were made by foreign 
buyers in the last week of July and the first week in 
August. But at that time the goods could not be 
moved out of this country. Grain left interior 
centers for the seaboard, filled elevators at the ports 
and intermediary points like Buffalo, and lay in cars 
that choked the Atlantic terminal yards of the rail- 



32 ECONOMIC ASPECTS OF THE WAR 

roads. Railroads to New Orleans and Galveston 
stopped receiving grain for export until the situation 
at the ports should clear up. 

Yet all this caused little worry to the farmer. 
The purchases of exporters and their continual 
bidding for grain drove up the prices paid on the 
farm. The world began to see that we were to feed 
Europe, especially when it considered Russia's par- 
ticipation in the war and the stoppage of her 
exports. 

Every day the farmer saw his property in wheat 
grow more valuable. On July 18, 1914, cash wheat 
(No. 2 Red Winter) was selling in New York for 
88 cents per bushel. On July 24 it was 92, on July 
29 it was 98~y 2 . Wheat sold from 95 cents to $1 
during the first half of August. On August 17 it 
touched 102^ and was never again below $1. On 
September 1, cash wheat sold for 120y 2 . Until 
December, when the next rapid advance took place, 
wheat sold in New York for prices varying between 
115 and 125. With the cereal selling at 125, the 
farmer who still held his wheat was being paid 37 
cents per bushel more than on July 18, when the 
New York price was 88 cents. The capital of the 
man who owned wheat had increased over 44 per 
cent. 

On December 18, the price reached 130%. It 
rose almost without interruption to 138 on Jan- 
uary 2, to 145^/2 on January 7, to 153*4 on Jan- 
uary 14. On January 27 the price touched 160. 
On February 4 it was 176%. From then until the 



THE AUGUST ORDER IN COUNCIL 33 

last of May it fluctuated often violently between 
160 and 175. This averaged fully 100 per cent 
higher than the 88 cents which was being paid for 
wheat in New York in the middle of July, 1914. 
Early in July, 1915, spot wheat still sold for 130, 
though the September option, due to the expecta- 
tion of a large American crop, was below 110. 

Once the financial and shipping difficulties had 
been removed, wheat was exported at the rate of 
1,000,000 bushels per day. Countries like Italy and 
Greece, which had always bought heavily from the 
Black Sea, had to buy in America. Scandinavia, 
which had secured rye from Russia and East Ger- 
many, had to substitute rye and wheat from Amer- 
ica. France found part of its harvest appropriated 
by the invading Germans, who also occupied all of 
Belgium. The various relief funds for Belgium, 
notably the Rockefeller Commission, began pur- 
chasing food, largely grain and flour, at the rate of 
$7,000,000 per month. 

Obviously no one was needed to come to the rescue 
of the wheat farmer. His constant interest has been 
in the continuance of the war, just as the constant 
interest of the cotton farmer has been in its conclu- 
sion. Peace rumors send the grain market down. 
They send the cotton market up. The Turk, in clos- 
ing and holding the Dardanelles, thus interning the 
Russian wheat supply, has been the American 
farmer's best hired man. The price of wheat on our 
markets would be reduced along with the forts at 
Kilid Bahr. — While Wall Street prayed for peace, 



34 ECONOMIC ASPECTS OF THE WAR 

the Produce Exchange, a few blocks away, prayed 
for the war to go on. 

As with wheat, so with flour. Winter patents sold 
in the third week in July for $5 per barrel. On 
August 11 the same flour was $5.25. On August 
25 it was $5.75; on September 25, $6. Here the 
price remained until the last week in December, 
when it sold at $6.50. The next week the price was 
$6.75. Then the rise was rapid, reaching $8.25 on 
February 1. This about corresponded with the 
summit of the wheat prices. From February 1 on, 
the price long averaged $7.50. Compared with the 
price of $5 in July, 1914, the advance was very 
perceptible. To be sure, it did not represent clear 
profit, such as the wheat advance represented to the 
farmer or the middleman. The miller had to pay 
more for some of the wheat in his 1915 flour than for 
the wheat in his 1914 flour. Nevertheless, even the 
millers, who chronically complain, confessed to some 
degree of prosperity because of the war. 

From August 1, 1913, to May 31, 1914, we ex- 
ported 75,600,000 bushels of wheat, receiving there- 
for $71,800,000. In the August-May months of 
1914-1915, the war year, we sent abroad 224,000,000 
bushels and were paid $297,000,000. In these 
months of 1913-1914 we exported 10,200,000 barrels 
of wheat flour, for which we were paid $46,750,000. 
In the August-May period just past we were paid 
$85,000,000 for 14,400,000 barrels. On the other 
hand, high prices which foreigners paid to farmers 
were matched by the equally high prices paid for 



THE AUGUST ORDER IN COUNCIL 35 

grain and flour by domestic users. This was one of 
the less cheerful sides of the boom in the export food 
trade. 

Indeed, the concern of the government was not 
to see that the miller and the farmer got their rights, 
but to see that the miller and the grain speculator did 
not rob the public. On August 18, 1914, an agent 
of the department of justice was a visitor at Minne- 
apolis flour mills, inquiring as to the sudden rise in 
the price of flour. At the beginning of 1915 both 
New York and the Federal Government were investi- 
gating the sensational rise in the price of wheat, and 
trying to discover in it the machinations of specu- 
lators. It was found that the old law of supply and 
demand was operating. The usual Russian supplies 
were cut off from neutral countries. The Allies 
were consuming more heavily than ever, and their 
own crops were short. With everyone bidding for 
American wheat and flour, prices naturally advanced. 

It is clear, therefore, that the American farmers; 

i 
and millers did not suffer because they did not ship- 

to Germany. Had they been able to do this, wheat 

and flour would have been higher than they were and 

our citizens would have made still more money than' 

they did, for Germany's demand would have beenf, 

added to that of the rest of belligerent and neutral 

Europe. But our grain and flour people did fairly 

well. 

Under these circumstances, naturally, no great 

agricultural interests went to Washington to clamor 

for freedom of foodstuffs shipments to Germany, 



36 ECONOMIC ASPECTS OF THE WAR 

Yet the principle at issue was no less vital than if 
f large losses had been involved. The historian of the 
| future will find it difficult to reconcile our insistence 
| on the movement of cotton because we needed the 
cotton money, with our acquiescence in the stoppage 
1 of the grain and provisions movement because we did 
\ not need the grain and provisions money. 

Nor will it suffice to say that Germany, by self- 
denial, did pull through, in spite of stoppage of food 
from America. Our rights and our duty were neg- 
lected, even if neglect of our rights did not mean 
distress to any of our citizens and even if neglect of 
our duty did not result in the starvation of Germany. 
Moreover, the farmer will perhaps not find himself 
untouched. September wheat at less than $1.10 in 
New York in July, 1915, meant well under $1 per 
bushel on the farm. The contrast with the price the 
farmer received for his last year's crop will be strik- 
ing. The contrast will be intensified if the Darda- 
nelles fall and Russian wheat is let loose. 

Above all, the final British measure, the "blockade" 
of Germany, has established a new practice, a new 
definition of blockade which may in the future be of 
the very greatest harm to the farmer. This feature 
of the question is reserved for Chapter V. 



CHAPTER III 

Foodstuffs Under International, Law. The 
October Order in Council. 

What we considered our rights in the matter of 
trading with belligerents was early in the war set 
forth in an announcement of our State Department 
declaring that such trade, except in contraband of 
war, was lawful and might go forward. On August 
15, 1914, the State Department published the follow- 
ing: 

"The existence of war between foreign govern- 
ments does not suspend trade or commerce between 
this country and those at war. The right to con- 
tinue to trade with belligerents is upheld by the 
well-recognized principles of international law. 

"Conditional contraband consists, generally speak- 
ing, of articles which are susceptible of use in war 
as well as for purposes of peace ; in consequence, their 
destination determines whether they are contraband 
or non-contraband. 

"Articles of the character stated are considered 
contraband if destined to the army, navy or depart- 
ment of government of one of the belligerents or to 
a place occupied and held by military forces ; if not 
so destined, they are not contraband, as, for example, 
when bound to an individual or a private concern." 

This theoretical right of America to ship food to 
Germany, asserted August 15, was cancelled five 



38 ECONOMIC ASPECTS OF THE WAR 

days later by the British Order in Council whose pro- 
visions we already know. In August and September 
of 1913 we shipped 4,700,000 bushels of wheat to 
Germany; in August and September, 1914, we 
shipped none. In August and September, 1913, we 
sent to Germany 20,500 barrels of flour; in August 
and September, 1914, only 65 barrels. In August 
and September, 1913, we sent to Germany $4,100,000 
of lard; in August and September, 1914, not a 
dollar's worth. The comparatively small sales even 
in 1913 are of course no measure of what Germany 
would have taken in the war year 1914. 

Noting the disappearance of shipments from over- 
sea, Berlin protested in early October. In a note 
handed to foreign diplomats in Berlin on October 
10, Germany called attention to the violations of the 
Declaration of London by the August Order in 
Council and the British September 21 contraband 
list. The protest was directed partly against 
Britain's absolute disregard of the contraband list 
established in the Declaration, especially against 
making rubber, hides, skins and certain kinds of iron 
ore contraband. However, the chief complaint was 
against the British "modification" which abolished 
the meaning and the privileges of conditional contra- 
band and made it as impossible for food to move into 
Germany as for cartridges. Finally, the protest 
asked neutral nations what they were going to do 
about these attacks upon their rights, and intimated 
that Germany would not engage to abide longer by 



THE OCTOBER ORDER IN COUNCIL 39 

the Declaration of London if Great Britain persisted 
in violating it. 

The German protest was cabled to our government 
on October 22. Our answer was sent shortly after. 
We replied that the United States had withdrawn its 
suggestion, made early in the war, that for the sake 
of uniformity the Declaration of London should be 
adopted as a temporary code of warfare. We with- 
drew the suggestion because certain belligerents 
refused to adopt the Declaration without changes 
and modifications. Thenceforth, our reply con- 
tinued, during the war, the United States and its 
citizens would rely for protection upon the existing 
rules of international law. 

None of the rights of trade with belligerents is 
more firmly established by the well-recognized prin- j 
ciples of international law than is the right to trade 
in food for the civilian population. This is a prin- ' 
ciple upheld by us in the past, and upheld with 
especial stress by the English Government, when 
Great Britain was a neutral. Continuously since 
the eighteenth century Britain has asserted that food 
was not contraband unless destined to a belligerent 
government or its military forces. 

In 1885 China was at war with France. France 
declared rice contraband of war, with the purpose 
of starving China into submission. The declaration \ 
met with immediate, sharp and successful opposition 
from Great Britain. Lord Granville, British Minis- 
ter for Foreign Affairs, wrote the French Govern- 
ment that regarding foodstuffs "there must be cir- 



40 ECONOMIC ASPECTS OF THE WAR 

cumstances relative to any particular cargo, or its 
destination, to displace the presumption that articles 
of this kind are intended for the ordinary use of life." 

Is there any distinction between the French act of 
declaring foodstuffs contraband of war, and the 
British instituting of measures that made it impos- 
sible to ship them to a belligerent even though they 
were left on the conditional contraband list? 

America also interested itself in the French case 
of 1885. The American Minister at Berlin wrote 
our Secretary of State regarding it. He called 
attention to the fact that an immense portion of our 
exports consisted of foodstuffs. Every European 
war, he added, produced an increased demand for 
these exports. The French doctrine attempted to 
stop food even when bound for civilians. If food, 
he went on, can thus be captured, clothing, the instru- 
ments of industry and all less vital supplies can be 
cut off, on the ground that they tend to support the 
efforts of the belligerent nation. 

"Indeed, the real principle involved goes to this 
extent, that everything the want of which will in- 
crease the distress of the civil population of the bel- 
ligerent country may be declared contraband of war. 

"The entire trade of neutrals with belligerents may 
thus be destroyed, irrespective of an effective block- 
ade of ports. War itself would become more fatal 
to neutral states than to belligerent interests." 

This letter might have been written in the same 
words regarding the manipulation of the British 
contraband list in the present war. 



THE OCTOBER ORDER IN COUNCIL 41 

The next instance to the point arose in the Boer 
War. Lord Salisbury was asked to state the position 
of the British Government regarding the movement 
of foodstuffs to the Boers. He said : 

"Foodstuffs with a hostile destination can be con- 
sidered contraband of war only if they are supplies 
for the enemy's forces. It is not sufficient that they 
are capable of being so used ; it must be shown that 
this was in fact their destination at the time of the 
seizure." 

Yet the same British Government in 1914 chose to 
cancel its own clearly expressed interpretation of 
international law, by decreeing that provisions should 
not move to Germany "if consigned to a merchant or 
other person in control of the authorities of the 
enemy state." 

Again, in 1904, Great Britain and the United 
States, acting in co-operation, opposed successfully 
the action of Russia in seizing a cargo of flour and 
railway material consigned to private concerns in 
Japan. In describing the representations of the 
British Government to Russia, regarding food ship- 
ments, Lord Lansdowne wrote Mr. Choate, then our 
Ambassador to England: 

"The test appeared to be whether there are cir- 
cumstances relating to any particular cargo to show 
that it is destined for military or naval use." 

Further than that, Lord Lansdowne clearly stated 
that Great Britain did not propose to be bound by 



42 ECONOMIC ASPECTS OF THE WAR 

the decision of a Russian prize court, if the court did 
not abide by the principle already stated. 

"His Majesty's Government further pointed out 
that the decision of the prize court of the captor in 
such matters, in order to be binding on neutral 
states, must be in accordance with the recognized 
rules and principles of international law and pro- 
cedure." 

The words of Lord Lansdowne might have been 
quoted in our first note of protest to England, on 
December 26. 

In this same Russo-Japanese War in 1904, our 
Secretary of State, John Hay, instructed our 
Ambassador at St. Petersburg to make representa- 
tions to the Imperial Russian Government in no un- 
certain terms. He was to communicate, in part, as 
follows : 

"When war exists between powerful states it is 
] vital to the legitimate maritime commerce of neutral 
/ states that there be no relaxation of the rule — no 
deviation from the criterion for determining what 
constitutes contraband of war, lawfully subject to 
belligerent capture, namely: warlike nature, use and 
destination. Articles which, like arms and ammuni- 
tion, are by their nature of self-evident warlike use, 
are contraband of war if destined to enemy territory ; 
but articles which, like coal, cotton and provisions, 
though if ordinarily innocent are capable of warlike 
use, are not subject to capture and confiscation 
unless shown by evidence to be actually destined for 
the military or naval forces of a belligerent. 



THE OCTOBER ORDER IN COUNCIL 43 

"If the principle which appears to have been 
declared by the Vladivostok prize court and which 
has not so far been disavowed or explained by His 
Imperial Majesty's Government is acquiesced in, it 
means, if carried into full execution, the complete 
destruction of all neutral commerce with the non- 
combatant population of Japan; it obviates the 
necessity of blockades ; it renders meaningless the 
principle of the Declaration of Paris set forth in the 
Imperial Order of February 29 last that a blockade 
in order to be obligatory must be effective ; it oblit- 
erates all distinction between commerce in contra- 
band and non-contraband goods, and is in effect a 
declaration of war against commerce of every descrip- 
tion between the people of a neutral and those of a 
belligerent state." 

What of the British treatment of our foodstuffs 
under the Order in Council of August 20 ? Was it in 
any respect different from the action which John 
Hay so resolutely opposed in 1904? It was not. 
England as a belligerent has followed the mischievous 
precedent of Russia in the same attempt which John 
Hay and Lord Lansdowne defeated in 1904. His 
Majesty's Government in 1914-1915 proceeded to 
a "complete destruction of all neutral commerce with 
the non-combatant population" of Germany, except- 
ing what might fortuitously be smuggled via adja- 
cent neutrals. It can be said of the English policy 
as well as of Russia's that it "obliterates all dis- 
tinction between contraband and non-contraband 
goods" ; and that it "is in effect a declaration of war 
against commerce of every description between the 
people of a neutral and those of a belligerent state." 



44 ECONOMIC ASPECTS OF THE WAR 

It is clear, therefore, not only that the partially 
abandoned Declaration of London gave to this coun- 
try the right to send foodstuffs to Germany, but that 
the common law of nations to which our government 
reverted, the law established by precedent and by the 
opinion of high authority, endorsed our right with 
equal emphasis. 

It is not to be assumed that the problem thus pre- 
sented to our government was wholly overlooked. In 
October of 1914 the State Department made certain 
representations, never published, to Great Britain. 
It cannot be said that this action failed of result. A 
new Order in Council was called forth. The Order in 
Council of October 29 — superseding that of August 
20 — contained, together with some apparent modifi- 
cations of terms, a variety of provisions that made 
the new regulations in reality more severe upon 
neutral trade and more subversive of established legal 
principles than the rulings which had called forth 
our protest. As in August, so in October, the Order 
in Council "accepted" the Declaration of London 
subject to the modifications in the Order. 

To be sure, Great Britain has contended that the 
October Order in Council was an amelioration of the 
severity of that of August 20. In his February 10 
note to us, Sir Edward Grey thus refers to the 
October Order : 

"Your Excellency will remember the prolonged 
discussions that took place between us throughout 
the month of October with a view to finding some new 
formulas which would enable us to restrict supplies to 



THE OCTOBER ORDER IN COUNCIL 45 

the enemy forces and to prevent the supply to the 
enemy of materials essential for the making of muni- 
tions of war, while inflicting the minimum of injury 
and interference with neutral commerce. It was with 
this object that the Order in Council of the 29th of 
October was issued, under the provisions of which a 
far greater measure of immunity was conferred upon 
neutral commerce." 

But the greater measure of immunity, upon closer 
examination, did not appear. 

So far as direct shipment to Germany was con- 
cerned, the new Order provided that hostile and for- 
bidden destination of food and other conditional con- 
traband — that is, destination for enemy forces — 
should be presumed in all cases allowed by the 
Declaration of London, and that .the presumption 
should further be made, 

"if the goods were consigned to or for an agent of 
the enemy state." (Paragraph II.) 

This appeared in terms to be a material modifica- 
tion of the August ruling which had included among 
forbidden destinations not merely "an agent of the 
enemy state" but also "a merchant or other person 
under control of the authorities of the enemy state," 
which evidently meant anyone within the enemy's 
boundaries. 

But unfortunately everyone within the enemy's 
boundaries was construed as an agent of the enemy 
state. That is, any consignee in Germany would 
have to prove before a British prize court that he 



46 ECONOMIC ASPECTS OF THE WAR 

was not an agent of the state. He would have the 
impossible task of proving this before the prize 
courts of a country which officially identified the 
civil with the military population of Germany. In 
his February 10 note, Sir Edward Grey clearly states 
this identity as the British Government's reason for 
putting the burden of proof upon the captured 
instead of upon the captor : 

"In the peculiar circumstances of the present 
struggle, where the forces of the enemy comprise so 
large a proportion of the population, and where there 
is so little evidence of shipments on private as dis- 
tinguished from government account, it is most 
reasonable that the burden of proof should rest on 
the claimant." 

In view of the small English army in the early 
months of the war it may have seemed to Sir Edward 
that the forces of the enemy comprised a large pro- 
portion of the population. But, adhering to the 
facts, there were not 6,000,000 Germans under arms 
when he wrote the February note. The population 
of Germany being nearly 70,000,000, the chances 
were eleven and one-half to one that foodstuffs for 
Germany were destined for the civil rather than the 
military population. 

By its perversion of the law of evidence the Octo- 
ber Order in Council was as effective as that of 
August 20 in preventing any direct trade in food 
with Germany. We know this better than we should 
know it if food shipments had been sent and held up 
in England. We know it because no one even dared 



THE OCTOBER ORDER IN COUNCIL 47 

to send a shipment — until the case of the Wilhelmina 
in January, considered in the next chapter. 

Having thus kept the ban on direct trade with 
Germany in conditional contraband, the Order then 
proceeded to make more difficult than ever the con- 
duct of trade with Germany via neutrals and even 
the trade between America and neutrals themselves. 

Paragraph 35 of the Declaration of London, if 
observed, provides that the German destination of 
conditional contraband, like food, shall not be the 
concern of England if the food is to be discharged 
in an intervening neutral port. The October Order 
replaced this with the following: 

III. "Notwithstanding the provisions of Article 
35 of said Declaration, conditional contraband shall 
be liable to capture on board a vessel bound for a 
neutral port if the goods are consigned 'to order,' 
or if the ship's papers do not show who is the con- 
signee of the goods, or if they show a consignee of 
the goods in territory belonging to or occupied by 
the enemy." 

IV. "In the cases covered by the preceding para- 
graph (III) it shall lie upon the owners of the goods 
to prove that their destination was innocent." 

That is, goods moving from us to European neu- 
trals were subject to capture if consigned to anyone 
in Germany, if the neutral consignee was not named, 
or if the shipment was "to order" of a neutral. If 
the goods were going to Germany the owner himself 
must prove that they were not for the German mili- 
tary. The proof, as we have seen, was impossible. 



48 ECONOMIC ASPECTS OF THE WAR 

Therefore nothing was so shipped. It cannot be too 
strongly emphasized that the lawful procedure is for 
England, the captor, to prove that the German 
destination of conditional contraband is a guilty one ; 
that is, a destination to the military. 

We now come to strictly neutral commerce, be- 
tween America and Scandinavia, for example, to 
which England, according to Sir Edward Grey, had 
conferred "a far greater measure of immunity" 
through the October Order in Council. The reverse 
is true. Every burden put upon that commerce by 
the August Order remained, and there was added the 
prohibition of shipments "to order." Shipments "to 
order" were not formally prohibited but they were 
declared subject to capture, and in the ensuing prize 
court the owner must then prove their innocent desti- 
nation. Even if a shipper felt certain of his ability 
to prove this, he would be mad to ship "to order," for 
this would mean a delay of his goods in England for 
several months, until they reached their place on the 
calendar of the prize court. Shipments "to order" 
ceased as soon as the British action was known. 

The ruling against neutral shipments consigned 
"to order" disarranged the established method of 
financing our exports of foodstuffs. Ordinarily the 
exporter draws on a Swedish buyer, for example, and 
sells the draft to an American bank. The bank buys 
the draft on condition of being allowed to retain 
possession of the shipping documents until the pur- 
chaser pays. The goods are then forwarded, but are 
consigned, not to the Swedish buyer, but "to the 



THE OCTOBER ORDER IN COUNCIL 49 

order" of the American bank. The bank sends the 
draft and the documents representing the goods to 
its Swedish correspondent, with instructions to deliver 
them to the buyer upon payment being made or as- 
sured. This general practice was prohibited by the 
British Order. In a large number of instances neu- 
tral buyers were put to the great inconvenience — for 
some an impossibility — of providing money in New 
York before the goods were shipped. 

A pertinent case, illustrating the operation of this 
part of the Order, was that of five steamers, under 
charter to an American line and containing American 
packing house products consigned to Scandinavia 
"to order." Three of the ships sailed from New 
York before the October Order was announced and 
the other two before it was known in this country. 
In spite of this the steamers were forced to call at 
Kirkwall and were then ordered to proceed to Hull 
and other British east coast ports, where their long 
period of detention began. 

These steamers were the Alfred Nobel, the Bjorn- 
stjerne Bjornson, the Kim, the Fridland, and the 
Arkansas. They were Norwegian steamers which 
the Gans Steamship Company of New York had 
taken over on a long term charter. Months went by 
and, in spite of all protests from the Americans in- 
terested and from the State Department, the steam- 
ers and their cargoes lay in the British ports. They 
were held there, inactive, at a time when they might 
have been earning $12 per bale carrying cotton to 
Rotterdam. This would have been equivalent to net 



50 ECONOMIC ASPECTS OF THE WAR 

earnings of $13,000 per day for the four steamers : 
$13,000 clear after paying charter money and 
operating expenses. 

November, December, January, February and 
March passed, without it being possible to get any 
action on the vessels. The money of the American 
provision exporters was in the meantime tied up. 
Their drafts had been returned to them, as the goods 
had never been delivered. The shippers were of course 
co-operating with the shipowners in pressing the 
matter in London and in attempting to get the State 
Department to do something for them. 

Finally, a hearing was set for April 13. On that 
day the attorneys of the shipowners and shippers 
appeared in a prize court in London. The British 
Attorney General moved for a delay in the case, in 
behalf of the British Government. He said that these 
cases were very complicated because of the large 
number of individual shipments on each boat. He 
said that each shipment must be investigated in 
America, and this took time. He said that the 
American shippers should have gotten in touch with 
the British Government before they made these 
shipments "to order." He pleaded for delay. 

Sir Samuel Evans, who was presiding over the 
prize court, granted the contention of the Attorney 
General. He exonerated the Attorney General of 
all charges of unnecessary delay and insisted that 
the cases were too complicated to be rushed. The 
judge of the prize court, following the October 29 
Order in Council, which was his law, had to consider 



THE OCTOBER ORDER IN COUNCIL 51 

that prisoners at the bar were guilty until they 
could prove themselves innocent. Since the vessels 
sailed before the Order was known in America, the 
British prize court procedure established that British 
laws are retroactive. Eventually a hearing was set 
for June 7, seven months after these cargoes, des- 
tined to neutral ports, had been seized. There were 
more postponements and at the end of July, 1915, 
the cases were still unsettled. 

Such was the effect of the prohibition of neutral 
shipments "to order." 

The last feature of the October Order which we 
need consider is one designed to force European 
neutrals not to send supplies to Germany even of 
their home growth and manufacture. This measure 
is one of the most extraordinary occurrences of the 
war. The October Order read: 

(IV. 2) "Where it is shown to the satisfaction of 
one of His Majesty's principal secretaries of state 
that the enemy government is drawing supplies 
for its armed forces from or through a neutral coun- 
try, he may direct that in respect of ships bound for 
a port in that country, Article 35 of the said Decla- 
ration shall not apply. Such direction shall be noti- 
fied in the London Gazette and shall operate until the 
same is withdrawn. So long as such a direction is in 
force, a vessel which is carrying conditional contra- 
band to a port in that country shall not be immune 
from capture." 

In plain language, if a British agent reported that 
Holland or Sweden was feeding Germany either with 
American or Swedish food, one of His Majesty's 



52 ECONOMIC ASPECTS OF THE WAR 

principal secretaries of state could direct British 
cruisers to capture food shipments from America to 
the offending neutral. It is no restriction of the 
omnipotence of these secretaries to say they might 
proceed to capture if it is shown to their "satisfaction 
that the enemy government is drawing supplies for 
its armed forces from or through a neutral country." 
Anything for Germany was presumed to be for the 
armed forces ; for, according to British naval prac- 
tice and to the public contentions, of British Minis- 
ters, the German military and the German- civilian 
population are regarded as one. Since October 29 
our commerce with European neutrals, has been 
carried on with permission of the British authorities 
who in the October Order were given charge of that 
commerce. 

Neither Sweden nor any other neutral was to be 
allowed to send to Germany food which it raised and 
supply the deficiency by abnormal importations 
from America. After the October 29 Order re- 
exportation embargoes on goods in the British con- 
traband lists did not suffice to keep European 
neutrals innocent in the eyes of England. It was 
necessary for them to lay simple embargoes on the 
exportation of these goods, including food, even if 
the trade was in the neutral country's own product. 

Nor did the export embargoes, when laid, suffice. 
Nothing did. Even after neutral governments ad- 
justed themselves to the British August and October 
Orders, there occurred incessant detentions and seiz- 
ures of food ships, especially those bound for Holland 



THE OCTOBER ORDER IN COUNCIL 53 

and the Scandinavian countries. Under conceptions 
of law with which no one could learn how to comply, 
cargoes of perishable goods were held up for months 
in British harbors. 

Our Department of State has finally published a 
list of the seizures of our vessels. In the first eleven 
months of the war Britain seized 2,000 vessels with 
American cargoes destined for Europe. In his note 
of January 7, Sir Edward Grey stated that 773 
vessels left our shores between August 4 and January 
3 for Holland, Scandinavia and Italy. Of these 773 
vessels, he said, there were 45 from which part or all 
of the cargo was thrown into prize court. Eight of 
the ships themselves were so treated. This gives no 
indication of the loss, borne entirely by neutral 
shippers and shipowners, due to the detention, un- 
loading and annoyance of the many vessels about 
which nothing suspicious even to the English mind 
could be found. It gives no indication of the injury 
to neutral commerce through discouragement and 
intimidation, through the well-grounded fear that 
while a perfectly innocent shipment was on the high 
seas, His Majesty's Council might legislate some 
new "international" law which would make the ship- 
ment subject to capture. 

In the meantime the patience of the United States 
Government had become exhausted. On December 
26 the Secretary of State addressed a note to our 
Ambassador at London, to be handed to Sir Edward 
Grey. The note admitted the propriety of Britain 
stopping contraband for the enemy. It states that, 



54. ECONOMIC ASPECTS OF THE WAR 

in case of conditional contraband, the policy of Great 
Britain was unjustified by the established rules of 
international conduct. It claimed that the seizure 
of cargoes consigned "to order" to neutral countries 
was not legal. It quoted Lord Salisbury to show 
that even if our foodstuffs were destined for hostile 
territory, they could not be lawfully seized unless it 
could be proven that they were for the enemy forces. 
The Government of the United States admitted the 
right to search and detain ships bound from America 

"when there is sufficient evidence to justify a belief 
that contraband articles are in their cargoes ; but 
His Majesty's Government, judging by their own 
experience in the past, must realize that this govern- 
ment cannot without protest permit American ships 
or American cargoes to be taken into British ports 
and there detained for the purpose of searching 
generally for evidence of contraband; or upon the 
presumption created by special municipal enactments 
which are clearly at variance with international law 
and practice," 

Finally, our note stated that American shippers 
and producers, deprived of established markets, were 
calling for relief ; and that unless this were obtained, 
there might arise in this country a feeling contrary 
to that which had so long existed between the Ameri- 
can and the British people. 

Great Britain sent two answers to this protest; a 
preliminary answer dated January 7, and a final one 
dated February 10. The January 7 reply is a not 
uninteresting document, though neither this commu- 



THE OCTOBER ORDER IN COUNCIL 55 

nication nor the one which, followed it conceded in 
the slightest degree the American demands. 

The first declared purpose of the British note of 
January 7 was to "clear the ground and remove some 
misconceptions that seem to exist." The author, Sir 
Edward Grey, then accepted the principle that a 
belligerent should not interfere with trade between 
neutrals unless such interference were necessary to 
protect the belligerent's national safety.* Great 
Britain, he continued, was ready to keep its action 
within these limits on the understanding that it 
retained the right to interfere in what was not "bona 
fide" trade between neutrals but really contraband 
destined for the enemy's country. Whenever its 
action unintentionally exceeded this principle, Great 
Britain, he said, was ready to make redress. 

Sir Edward then told us that we were wrong in 
assuming that our industries were suffering from the 
loss of their usual market. As conclusive proof he 
cited the figures of export from New York to Italy, 
Holland and Scandinavia. In November, 1914, we 
exported to Denmark $7,100,000 of goods, compared 
with $560,000 in November, 1913. We sent $2,860,- 
000 to Sweden, compared with $380,000. We sent 
$2,320,000 to Norway, compared with $480,000. 
We sent $4,780,000 to Italy, compared with $2,980,- 
000. We sent $3,960,000 to Holland, compared with 
$4,390,000. 

*The "necessity of protecting the belligerent's national 
safety" is the excuse offered for every wrong committed in 
this war. 



56 ECONOMIC ASPECTS OF THE WAR 

The note passed over, naturally, the fact that our 
November exports to Germany were only $40,000, 
compared with $48,000,000 in 1913, or that our 
exports to Austria fell from $1,970,000 in Novem- 
ber, 1913, to nothing in 1914. It did not inform 
its readers that the figures he gave were those of 
our exports that started for European neutrals. 
How much got past His Majesty's cruisers was 
another story. 

Moreover, the note implied that our larger exports 
to the Scandinavian countries consisted solely of 
articles destined for Germany, and henCe subject to 
British interference. But, according to another part 
of the same note, Great Britain was interfering only 
with "contraband destined for the enemy's country." 
By that test Britain could lawfully have interfered 
with only such of the excess exports to European neu- 
trals as represented absolute contraband — since the 
Declaration of London allows neutrals to receive con- 
ditional contraband unmolested — and even such a 
course would have assumed that all such merchandise 
had a German destination. 

As a matter of fact, the excess of exports to 
European neutrals was to some degree destined for 
Germany. The point is that free goods and condi- 
tional contraband had a right so to move. How- 
ever, much of the excess was for the neutrals them- 
selves. They had need of larger imports from us 
than ever before. For example, they had formerly 
bought from Germany their copper products. Ger- 
many was keeping her copper at home. Therefore 



THE OCTOBER ORDER IN COUNCIL 57 

the neutrals needed to import raw copper in larger 
quantities than before, in order to make their own 
copper products. Our copper exports to neutrals 
were the most suspicious thing Sir Edward Grey 
found. Similarly, we exported more cotton to the 
neutrals because their own mills were making cotton 
piece goods that had been coming from Germany, and 
supplying foreign markets to which Germany was 
denied access. 

Above all, the neutrals needed more foodstuffs. 
East Germany usually exports large quantities of 
wheat flour and of rye to Scandinavia. Not only 
was this cut off, but the ordinary shipments of wheat 
and rye from Russia dropped, first because of 
Russia's export embargo (finally lifted) and later, 
to a degree, because of Germany's control of the 
Baltic Sea. The closed Dardanelles kept Russian 
Black Sea supplies locked up. Both Russian and 
German supplies had to be replaced by supplies from 
the United States. 

The British note has only the following brief 
reference to foodstuffs : 

"With regard to the seizure of foodstuffs to which 
your Excellency refers, His Majesty's Government 
are prepared to admit that foodstuffs should not be 
detained and put into a prize court without pre- 
sumption that they are intended for the armed forces 
of the enemy or the enemy government. We believe 
that this rule has been adhered to in practice hitherto, 
but, if the United States Government has instances 
to the contrary, we are prepared to examine them, 
and it is our present intention to adhere to the rule 



58 ECONOMIC ASPECTS OF THE WAR 

though we cannot give an unlimited and uncondi- 
tional undertaking in view of the departure by those 
against whom we are fighting from hitherto accepted 
rules of civilization and humanity and the uncer- 
tainty as to the extent to which rules may be violated 
by them in future." 

In the face of the conditions which we have re- 
viewed, we are touched by the simple "belief" of His 
Majesty's Government that they had adhered to 
international law hitherto. 

However, Britain was preparing the way to insti- 
tute severer measures, should the need arise. The 
italicized clauses can be translated into ordinary 
English. They mean: "We cannot unconditionally 
agree to continue to adhere to the limits of law. 
Our enemy has departed from the rules of civiliza- 
tion: therefore we may insist upon having a free 
hand in the future." 

Here was the theory that England was fighting 
our battle, and that of the civilized world. To 
assume that the United States would calmly agree 
to this proposition was a clear imputation that this 
country was not genuinely neutral and would be 
willing so to confess. 

The obstructive tactics of the British Government 
were to be put to a severe test by the case of the 
American steamship Wilhelmina, with which we shall 
now deal. 



CHAPTER IV 

The Wilhelmina — A Test Case 

Early in 1915 the question whether our merchants 
could send foodstuffs to Germany, when not intended 
for the government or for the armed forces of that 
country, was sharply tested in a case which merits 
its own corner in history. This was the case of the 
steamship Wilhelmina. America lost the case. 

The Wilhelmina was of American registry, and was 
under charter to the W. T. Green Commission Com- 
pany of St. Louis, a concern engaged previously to 
the war in exporting provisions to Germany. Noting 
the statement of Sir Edward Grey in his January 7 
note, that Great Britain was not considering food- 
stuffs contraband unless destined for the govern- 
ment or armed forces of the enemy, the St. Louis 
merchants determined to take advantage of this 
expression in an effort toward the resumption of 
their trade. Accordingly they loaded on the Wil- 
helmina a cargo of grain, flour and provisions to the 
value of $200,000, and despatched the vessel from 
Brooklyn on January 22, with sailing papers for 
Hamburg and under conditions such as to put the 
British policy very clearly to the test. 

The goods were not consigned "to or for an agent 
of the enemy state," or even, recalling the wording 



60 ECONOMIC ASPECTS OF THE WAR 

of the August Order in Council, "to or for a 
merchant or other person under the control of the 
authorities of the enemy state," at least in any 
reasonable interpretation. Nor were they consigned 
"to order." Instead, the consignment was made to 
Mr. Brooking, manager of the W. T. Green Com- 
pany, who sailed in advance for Hamburg to receive 
the cargo on arrival. The food was going to an 
American citizen. 

There was nothing in any British Order in Council 
making shipments so consigned subject to seizure. 
Further, the cargo went forward with the endorse- 
ment of the State Department, Mr. Bryan having 
stated that he saw no reason for action against the 
vessel by His Majesty's authorities. It was evident 
that if Great Britain were to seize the Wilhelmina, 
some new excuse must be found for such action. 

The manner in which the British public looked 
upon the voyage of the Wilhelmina was apparent 
from the tone of British newspapers from the day 
the vessel sailed. A single instance, typical of many, 
will illustrate. On January 26 the London Morning 
Post discussed the case in an editorial, saying that 
this was another test prepared by the friends of 
Germany in America for the injury of British inter- 
ests. The editorial proceeded: 

"This is a more plausible and more insidious 
experiment than the Dacia, and if it is allowed, will 
be more injurious to the cause of the Allies. 

"At present German food prices are but little, if 
at all, higher than British food prices, but the Allies 



THE WILHELMINA CASE 61 

hope that if the blockade continues, in time it will 
become extremely irksome for the German people to 
continue at war, owing to the increasing scarcity of 
food, and that they will desire their government to 
discontinue the war. 

"If Americans will fairly consider it, this is the 
most merciful way of ending such a conflict, which 
otherwise may continue to rage until the manhood 
of Europe is destroyed. 

"There is a right and wrong in this war, and the 
United States by their public opinion have already 
shown where they believe the right to lie. Will they 
now say that interest is more important than right, 
and money than justice and liberty? We cannot 
believe it of a nation which has the tradition and the 
origin of the United States." 

Nothing could be plainer. The voyage of the 
Wilhelmina was an attempt to thwart England's 
starvation campaign. In view of Great Britain's 
fight for civilization, America should stand aside, 
should waive its legal rights and its commercial 
interests. Evidently the British press was not of 
the impression that their government had been allow- 
ing food for civilians to proceed to Germany, as 
implied in Grey's January 7 note, where he said no 
foodstuffs had been seized except upon presumption 
of destination for enemy forces. The Wilhelmina 
was recognized as an insidious attempt to get in 
motion a shipment for civilians, for the first time. 

On January 25 the German authorities, on behalf 
of the imperial government, confiscated all supplies 
of grain and flour in the empire. Such action was 
to be followed by government distribution of these 



62 ECONOMIC ASPECTS OF THE WAR 

foodstuffs, with the purpose of diminishing the con- 
sumption and thereby assuring the sufficiency of the 
existing stock until the harvest in July. Mere 
appeals to the Germans to reduce their use of bread 
had apparently not sufficed to conserve the supply. 
The confiscation specifically did not affect all foods, 
but only those for which t shortage threatened ; 
namely, grain and flour. 

This Decree was announced on the evening of Jan- 
uary 25. It was known outside of Germany on the 
26th. On the 27th the London press announced that 
all food in and for Germany was now subject to 
seizure; that it was therefore to be considered from 
that time as government property, and hence con- 
traband. Therefore, London concluded, the Wil- 
helmina must be stopped. 

To meet this situation the attorney for the W. T. 
Green Commission Company requested the German 
Ambassador at Washington to guarantee that the 
food on the Wilhelmina would not reach the military 
forces of Germany. Count von Bernstorff replied as 
follows : 

"I, as representative of the German Government, 
guarantee to you that the foodstuffs will not reach 
the German Government, its agents or contractors, 
nor the military and naval forces. I will further 
take the necessary steps which will insure that the 
German Government will not make use of its right 
of pre-emption. 

"I shall at once communicate in this matter with 
the State Department and advise you later." 



THE WILHELMINA CASE 63 

On the following day, January 29, the German 
Ambassador communicated this guarantee to the 
State Department at Washington, on behalf of his 
home government. 

To be sure, the original German Decree specifically 
stated: "The provisions of this ordinance do not 
apply to grain or flour imported from foreign coun- 
tries." But the importer had to operate through the 
War Grain Company, the Central Purchasing Com- 
pany, or the German community officials. This did 
not mean the armed forces of the government or the 
government's military agents. The agencies named 
were created to direct imported grain solely into 
channels of private consumption. But the matter 
was easily misunderstood abroad; and hence, on 
February 5, the German Federal Council rescinded 
the requirement for the importer to operate through 
the companies or the community officials, and the 
enactment was made to read simply: 

"The provisions of this ordinance do not apply 
to grain and flour which are imported from foreign 
countries." 

This modification of the German Decree was made 
known to our government by the German Govern- 
ment in a note never published in full but quoted in 
part in ours to Great Britain of February 15. 

In England the German Decree was taken gener- 
ally as a confession that Germany was in desperate 
straits. And if the supplies of food in Germany 
were, in truth, running short, then the last thing 



64 ECONOMIC ASPECTS OF THE WAR 

that His Majesty's Government wanted was to see 
its "economic pressure" relaxed. The censored press 
despatches from London daily told of a firmer and 
firmer intention on Britain's part to stop the Wil- 
helmina. A reported offer of the American Relief 
Commission to buy the cargo of the Wilhelmina was 
hailed in London as a happy solution of "the Wilhel- 
mina incident, which threatens to arouse the resent- 
ment of the British public." The offer of the Relief 
Commission was finally made, and rejected, on Feb- 
ruary 7. The president of the W. T. Green Com- 
mission Company said the food would be sold at 
Hamburg for the civilian population, and in no other 
way. 

On February 1 officials of the British Foreign 
Office stated to the press that they were unable to 
understand the value of Ambassador Bernstorff's 
guarantee that the Wilhelmina's cargo would not 
reach the German military, in view of the German 
Decree placing all foodstuffs under government con- 
trol. They omitted the detail that imported food- 
stuffs were not affected by the Decree. 

The German Decree was apparently the excuse 
England had sought for putting upon a formal basis 
the stoppage of food for Germany which had been 
practiced since the opening of the war. On Febru- 
ary 2, Ambassador Page cabled our State Depart- 
ment that the British fleet had been ordered to con- 
sider grain and flour for Germany as contraband, 
subject to seizure and confiscation. This included 
the cargo of the Wilhelmina, it was added, but as a 



THE WILHELMINA CASE 65 

special dispensation this particular consignment, 
having been forwarded before the confiscation order, 
would be paid for. Other seizures would be without 
compensation. 

Meantime the Wilhelmina was nearing the Eng- 
lish Channel. On February 4 the German Govern- 
ment gave forth its War Zone announcement — a 
warning that after February 18 all British merchant 
vessels found in the waters around Great Britain 
would be torpedoed, without regard to the safety of 
crews or passengers. As a justification of this 
unprecedented method of warfare, it was declared 
that England was attempting to starve a nation of 
70,000,000 people by means not recognized by inter- 
national law. Therefore the Germans proposed to 
use what means they could to shut off the British 
food supply. 

On the same February 4, the British Foreign 
Office issued a statement that it would stop the Wil- 
helmina and throw her cargo into a prize court. 
The statement said that under the Decree of Jan- 
uary 25 all grain imported into Germany must pass 
through semi-official hands. Therefore it could be 
considered as destined to the government and hence 
contraband. (No attention was paid to Count von 
Bernstorff's guarantee to Washington from his gov- 
ernment that the grain would reach only civilians.) 
If the cargo were seized, the* British authorities said 
they would pay for it, and they would pay the owners 
of the vessel for any delay caused by the British 
action. Finally, the statement announced that be- 



66 ECONOMIC ASPECTS OF THE WAR 

cause of Germany's intention to sink merchant ves- 
sels with their crews, England might be compelled to 
"adopt in retaliation more stringent measures 
against German trade." 

Also on February 4, the German Ambassador at 
Washington further complicated the case by for- 
mally suggesting that the distribution of the food 
of the Wilhelmina should be supervised by American 
consular officers in Germany, who could give assur- 
ances that none of it would get into the hands of 
armed forces. The British Embassy intimated, 
according to Washington despatches, that this 
would not be acceptable. Even if it were assured, 
the Embassy said, that the imported food would 
reach only German civilians, that would make it 
possible for the military to live on the home supplies 
while the civilians lived on imports. 

Reduced to the last extremity, the British always 
fell back upon the contention in one or another 
form, that if the Wilhelmina and such ships got 
through with food to Germany, this would frustrate 
the starvation plan. 

It so happened that the Wilhelmina, a small 
steamer, was caught in severe gales on the North 
Atlantic, and on February 9 put in at Falmouth for 
refuge. Two days later, the British authorities 
formally seized the cargo. 

The owners of the goods urged thereupon that 
by the most extreme constructions of international 
law on the part of England, that country was not 
justified in seizing more than the grain and flour on 



THE WILHELMINA CASE 67 

board the Wilhelmina, for only these articles had 
been included in Germany's confiscation Decree. It 
was claimed that the ship should be free to proceed to 
Germany after the British had taken off the grain 
and flour, constituting only 15 per cent of a cargo 
of foodstuffs. 

This contention was communicated to the British 
Government, in a note which our State Department 
sent to Britain on February 15. The note implied 
that the British stoppage of the cargo because of the 
German Decree was invalidated by the modification 
of that Decree, which exempted from its operation 
imported foodstuffs. A communication of the Ger- 
man Government was quoted, citing this modification 
and offering to allow American consular officers to 
supervise the distribution of such imports to German 
civilians. The hope was expressed that unless Brit- 
ain had in its possession facts not in the hands of the 
United States, the Wilhelmina might be allowed to 
proceed. 

Before the British answer to this note was forth- 
coming, important events occurred in parliament. 
On February 16, the day after our note was sent, 
Winston Churchill, Lord of the Admiralty, an- 
nounced in the following words the forthcoming 
"blockade" of Germany : 

"We have not yet stopped the importation of food 
into Germany, but the time has come to consider the 
situation. The Allied Governments will probably 
make declaration of action, the effect of which will be 
to bring the full pressure of the English naval power 



68 ECONOMIC ASPECTS OF THE WAR 

to bear on Germany. The pressure of the navy 
itself could decide the issue of this war." 

It is amazing how thoroughly American public 
opinion was misinformed as to the facts of the case, 
and how generally the public accepted as truth the 
absurd statement of Churchill that "we have not yet 
stopped the importation of food into Germany but 
the time 'has come to consider the situation." And 
no one seemed to grasp the fact that foods imported 
into Germany were not lawfully subject to British 
seizure. 

Even in so well-informed a paper as the New York 
Evening Post there appeared on February 18 an 
editorial which ignored the basic facts that England 
never had let food go by, and that the German 
Decree excluded imported food. The Post said: 

"The historic British position has been that food- 
stuffs not destined for use of the army must be 
allowed to pass. That, in general, has been the 
practice of the English cruisers and courts during 
the early months of this war. But now that Ger- 
many has abolished all private buying and selling 
of foodstuffs within the empire, the old distinctions 
are obliterated. The presumption today is that all 
foodstuffs entering Germany are for military use, or 
may be immediately requisitioned for military use." 

On February 19, Sir Edward Grey answered our 
note regarding the Wilhelmina. He said that the 
steamer had been seized after the German Decree of 
January 25. He added that the February 6 modi- 
fication excepting imported foodstuffs was not known 



THE WILHELMINA CASE 69 

to Britain at the time of the Wilhelmina seizure, 
and declared that this modification had just become 
known. A prize court must pass on the question 
whether the modification changed the status of the 
vessel. 

However, he continued, there were other grounds 
for detaining the Wilhelmina. The Germans had 
justified the bombarding of Hartlepool and Scar- 
borough on the ground that these placed were forti- 
fied, or were serving as bases for military operations. 
Therefore England might stop foodstuffs for Ham- 
burg on the ground that Hamburg was fortified and 
that food so destined was, according to the Declara- 
tion of London, presumably destined to military 
forces. "Hamburg . . . is in part protected by 
fortifications at the mouth of the Elbe" and is "a 
fortified town and a base of operations and supply." 

The owners of the Wilhelmina's cargo, the note 
observed, would have a right to establish their inno- 
cence, if they could, in a British prize court. It was 
suggested that diplomatic action by the United 
States be avoided until full advantage had been taken 
of the appeal to the courts. 

It was protested further that Britain had not yet 
interfered with food moving to Germany: 

"His Majesty's Government have not, so far, de- 
clared foodstuffs to be absolute contraband. They 
have not interfered with any neutral vessels on 
account of their carrying foodstuffs, except on the 
basis of such foodstuffs being liable to capture if 
destined for the enemy's forces or government." 



70 ECONOMIC ASPECTS OF THE WAR 

Finally, the British note averred that Germany 
had violated international law by bombarding British 
coast towns, laying mines, mistreating Belgians and 
Frenchmen and torpedoing British merchant vessels. 
Therefore Britain could not be expected to remain 
bound by old laws. Neutrals would be expected to 
stand aside while England declared food contraband, 
or adopted such other measures of retaliation as 
should be thought fitting. 

It is impossible to pass over this note without 
commenting upon certain of its features. For 
example, Sir Edward Grey informed us that Eng- 
land did not know of the modification of the German 
Decree when the Wilhelmina was seized on February 
9. That modification passed the Bundesrat on Feb- 
ruary 6. The news was cabled to the United States 
via London. At the head of this despatch to Ameri- 
can papers, published February 8, we read, "Berlin, 
February 6; via London, February 7." This means 
that on February 7 this important news passed 
through the hands of the British censor. That it 
was not known to the Foreign Office on February 9 
was, to say the least, extraordinary. 

The fortifications by which Hamburg is "pro- 
tected" are at the mouth of the Elbe, over seventy- 
five miles from the port. Hamburg is fortified about 
to the same extent as Albany is fortified by the pro- 
tections about New York City, and on such a theory, 
Peekskill, Tarrytown and Yonkers are military 
establishments far more perilous. 



THE WILHELMINA CASE 71 

The British statement that it "might be obliged" 
to consider interfering with food moving to Ger- 
many needs no comment. 

It is necessary to say a word about Britain's con- 
tention that it should have a free hand because Ger- 
many was overstepping international morality in its 
manner of making war on England. That of course 
is no excuse for England taking action against Ger- 
many which violates the rights of neutrals. When 
Germany's novel conception of international law 
infringes upon our rights, we protest and take care 
of ourselves. We do not invite or allow England to 
defend us against Germany's aggressions any more 
than we allow Germany to defend us against Eng- 
land's aggressions. Once admit this altruistic policy 
of reprisals by belligerents and all our neutral rights 
vanish. 

It was evident, however, from the developments in 
the Wilhelmina case, that no criticisms were likely 
to change the course of events or to alter the deter- 
mined policy of His Majesty's Government. 

On February 27, the writ was issued putting the 
Wilhelmina's cargo into the prize court. The 
attorneys for the cargo, who were in London, hoped 
for a speedy trial. They expected that the vessel 
would get to Hamburg, for the "blockade" of Ger- 
many was not announced until March 1, three weeks 
after the Wilhelmina was detained. On March 19, 
and again on March 23, the American attorneys in 
New York and London protested against the delay 
in trying the case in the prize court. 



72 ECONOMIC ASPECTS OF THE WAR 

On March 26 the British Solicitor of the Treasury- 
suggested to the attorney of the vessel that in view 
of the loss of $1,000 per day as a result of the deten- 
tion, the cargo should be unloaded, and that such 
part of the merchandise as was deteriorating should 
be sold through the prize court. The suggestion 
was refused on the ground that the parties who had 
chartered the vessel preferred to keep the cargo 
aboard, ready to sail for Hamburg when the prize 
court declared it free. 

The Wilhelmina case was finally set for March 31. 
It was evident, however, that the English ministry 
did not want the case to come before the prize court ; 
and the reason for their attitude becomes clear after 
a little reflection. As shown in the previous chapter, 
Great Britain as a neutral has constantly denied 
that foodstuffs destined for civilians in a belligerent 
country are seizable as contraband. Any action of 
a prize court condemning the cargo of the Wilhel- 
mina would have been an absolute reversal of this 
attitude by her judiciary and would have promised 
a very possible future embarrassment. The vessel 
could not be held on any charge of attempted block- 
ade-running, for it had sailed and had been detained 
before the blockade was declared. Yet it was not 
safe to let America get a food ship through to Ger- 
many. More might follow if such a precedent were 
established. 

The problem was solved by the familiar British 
method of a new Order in Council, which, if it cannot 
be called a substitute for international law, served 



THE WILHELMINA CASE 73 

at least to give a legal formula to what was done. 
This Order was passed on March 23, but was not 
divulged until the trial, on March 31. Then, to the 
surprise of the American attorneys, the crown law- 
yers produced an Order in Council which authorized 
the crown to requisition any neutral ship and cargo 
which for any reason whatever had been brought 
before the prize court. The new Order read : 

"Where it is made to appear to the judge, on the 
application of the proper officers of the court, that 
it is desired to requisition on behalf of His Majesty 
a ship in respect of which no final decree of con- 
demnation has been made, he shall order that the ship 
shall be appraised, and that, upon an undertaking 
being given in accordance with rule 5 of this Order, 
the ship shall be released and delivered to the 
crown." 

The counsel for the Wilhelmina's cargo were taken 
aback, and asked for a continuation of the case until 
April 13, so that they could revise their argument 
to meet the new law that was to apply. They found 
there was no argument. The power of Britain, 
under her self-made international law, to requisition 
the cargo of the Wilhelmina, made a trial of that 
cargo's right to proceed to Germany practically out 
of the question. 

The American shippers were therefore compelled 
to submit to the purchase of the goods by the British 
government. The offer was made by Great Britain 
in a note to Ambassador Page, published April 13, 
to be transmitted to the W. T. Green Company. 



74 ECONOMIC ASPECTS OF THE WAR 

The British note stated that the sailing of the Wil- 
helmina was designed as a test case to see whether 
American food could be sent to Germany. Since the 
Blockade Order, however, the case was academic. 
That Order would prevent any more food being sent, 
no matter how the case of the Wilhelmina might be 
decided. Hence there was no longer any object in 
continuing the proceedings. The British Govern- 
ment therefore offered to buy the cargo at Hamburg 
prices, the compensation to be determined by a 
referee appointed by Sir Edward Grey and Ambas- 
sador Page. As to the vessel itself, Great Britain 
offered to compensate for loss due to the detention 
so far as that was caused by the action of the British 
authorities; but it had been contended by London 
from the first that the ship might have discharged 
cargo and proceeded immediately after February 9. 
Lord Mersey was appointed referee. Early in 
May, London despatches reported that he had de- 
creed $430,000 as a settlement for the Wilhelmina 
case. The London Daily Mail quoted the Wilhel- 
mina owners as "highly pleased with the handsome 
and generous settlement made by the government 
for the steamship's cargo." The W. T. Green Com- 
mission Company, through their lawyers, deny any 
such satisfaction. The profit on that one $200,000 
cargo was large, but in their attempt to re-establish 
their German business they had failed. Had they 
succeeded, they would have made a large profit not 
on one, but on a hundred cargoes. 



THE WILHELMINA CASE 75 

Neither they nor the country was satisfied by this 
single "handsome and generous settlement" for the 
enforced surrender of our neutral rights and inter- 
ests. 



CHAPTER V 

The Blockade 

Shortly before the arrival of the British Govern- 
ment's note of February 10, containing the final 
reply to our protest of December 26, the situation 
with respect to our export trade, and especially as to 
the question of foodstuffs for Germany, had been 
given a new phase by the appearance of Germany's 
War Zone announcement. The British February 10 
note was a communication of no epoch-making bril- 
liancy. Its most striking feature was the delicate 
irony, already remarked, with which Sir Edward Grey 
informed the American public that the Order in Coun- 
cil of October 29 was an amelioration of the severe 
conditions of the August 20 Order. 

The authorities at London, it appeared in this 
February note, were considering whether they should 
not regard all food for Germany as absolute contra- 
band,* because of the alleged identity of the civil 
and military population of that country. And in 
view of the recent War Zone proclamation from 
Berlin, it was intimated that still stricter measures 
might be necessary to protect the interests of Great 

* Grain and flour were already so considered. On February 

2 Ambassador Page cabled from London that the British navy 

had been instructed to treat these commodities as absolute 
contraband. 



THE BLOCKADE 77 

Britain. Thus the note furnished a record of the 
ending of one episode and the beginning of another, 
and for purely historical purposes it had a certain 
value ; but as to meeting the causes of the complaint 
in our December note, or the question of their 
removal, it contributed nothing. 

Germany's War Zone Decree, growing out of the 
actions of Great Britain in obstructing food supplies, 
had been issued by the German Admiralty on Febru- 
ary 4. It was a warning addressed to the commer- 
cial world, stating that from February 18 — two 
weeks after the issuance of the warning — the waters 
around Great Britain, including the whole of the 
English Channel, would be a danger zone. In this 
area, it was announced, all British merchant vessels 
caught by the German submarines would be destroyed 
without obligation respecting the safety of crews or 
passengers, and neutral vessels would be in danger. 
In explanation of the latter portion of the Decree, 
reference was made to a secret order of the British 
Admiralty authorizing the vessels of that country 
to use neutral flags to deceive German submarines. 
In a separate statement the German Chancellor de- 
clared that neutrals were not protecting their rights 
to trade with Germany, and that the Germans could 
not sit still and die of famine but must retaliate with 
the same weapons that England used. 

The danger to our interests involved in this note 
was quickly recognized at Washington. Our answer 
was dated February 10. It reminded the Germans 
that the prerogatives of belligerent war vessels, with 



78 ECONOMIC ASPECTS OF THE WAR 

respect to neutral shipping, were limited to the right 
of visit and search. Our government denied that the 
United States had been unneutral in failing to pro- 
test against violations of its neutral rights. We 
denied that the British misuse of our flag cast a sus- 
picion on all neutral shipping warranting its destruc- 
tion. Should a German commander destroy on the 
high seas an American vessel and the lives of Ameri- 
can citizens, it was added, we should hold Germany 
to a strict accountability. Finally, we stated for 
Berlin's information that we had made representa- 
tions to Britain against using our flag indiscrimi- 
nately to protect its vessels. 

Regarding our brief correspondence with England 
as to the use of the American flag on British vessels, 
it may be noted merely that Great Britain's reply 
to our communication was not responsive. The same 
must be said of the German reply of February 16 to 
our protest against the War Zone Decree. Ger- 
many declared that she had abided by the Declara- 
tion of London, as suggested by America early in 
the war, and had even let food ships go from Den- 
mark to England, though her warships could have 
stopped such trade any time. In the meantime 
England had torn up the Declaration of London and 
was trying to starve her opponent. Neutrals had 
protested, Germany said, but without avail. 

Since neutrals — the note continued — had merely 
protested, and had taken no action when England 
was abridging their right to trade with Germany, it 
was now expected that they would show no less toler- 



THE BLOCKADE 79 

ance to Germany. It was stated that both mines 
and submarines would make the War Zone unsafe. 
The best thing for neutrals would be to avoid the 
Zone; or for neutral merchant ships to be convoyed 
by neutral war vessels. Danger to neutral merchant 
vessels was doubled by the British insistence on the 
right to adopt neutral flags, Germany declared. 

We were given, further, the well-worn assurance 
that Germany was fighting for her life. Finally — 
the hopeful thing about the note — Germany implied 
that she would give up her submarine warfare if Eng- 
land would abandon her unlawful attempt at starva- 
tion, and would allow foodstuffs and raw materials 
to move into Germany without interference. On the 
following day, February 17, the German Embassy 
at Washington, as already noted in connection with 
the Wilhelmina case, made the statement that the 
German Government would consent to have American 
consular officers supervise the distribution to civilians 
of foodstuffs imported from America. 

The American Government believed it saw in the 
German proposal the basis for a successful negotia- 
tion with both belligerents with regard to the rights 
of neutrals. It saw the possibility of recalling the 
belligerents to the limits of international law, as that 
law was known before the opening of the war. We 
had suffered through the British interference with 
our exports to Germany and adjacent neutrals. 
Still greater loss threatened us from the blockade 
that Britain was obviously about to declare. We 
had reason to fear serious consequences from the pro- 



80 ECONOMIC ASPECTS OF THE WAR 

spective submarine warfare of Germany. It was to 
the interest of all neutrals to have these evils averted, 
along with other practices, in violation of inter- 
national law, which had grown up in the course of 
the struggle, such as the laying of floating mines on 
the high seas. 

Therefore, we sent Germany and England an 
identical note, dated February 20, containing cer- 
tain suggestions. Both nations were to cease the use 
of all mines on the high seas. Floating mines were 
to be discontinued. Anchored contact mines, used 
defensively, and not out beyond the cannon range of 
harbors, were to be constructed with the stamp of 
the government that made them and were to be so 
constructed as to be harmless if they went adrift. 

Submarines were to be used against merchant 
ships only for the purpose of exercising the right to 
visit and search. 

Great Britain was to desist from its interference 
with the movement of foodstuffs into Germany. 
Foodstuffs to Germany from the United States or 
other neutrals were to be consigned to agencies desig- 
nated by the United States Government, and the 
German Government was to undertake not to requisi- 
tion such supplies. 

Nearly a month passed before this note was 
answered. The German answer was dated March 1. 
It accepted the American proposition in principle 
and in most of its details. Germany agreed to cease 
the use of floating mines, and to construct anchored 
mines only as indicated, though not consenting to 



THE BLOCKADE 81 

forego wholly the use of anchored mines for offensive 
purposes. Submarines were to be used in accordance 
with the recognized rules of international law. But 
these concessions were dependent upon reciprocal 
conduct by Great Britain, the note apparently de- 
manding that Germany should be allowed to receive 
not only foodstuffs but also other goods on the free 
list and conditional contraband list of the Declara- 
tion of London. Moreover, British merchant vessels 
must engage not to go armed or to resist search by 
the submarines, and must cease the deceptive use of 
neutral flags. 

In contrast to this attitude, Great Britain, on 
March 15 — after the announcement of that country's 
blockade policy — sent us a flat rejection of our pro- 
posal. First, the British note stated that 

"The reply of the German Government . . . has 
been published and it is not understood that the 
German Government is prepared to abandon the 
practice of sinking British merchant vessels by sub- 
marines. ..." 

The note then referred to the doubts expressed by 
Germany of the feasibility of foregoing the use of 
anchored mines on the high seas for offensive pur- 
poses. It was denied that so far the British forces, 
"either naval or military, can have laid to their 
charge any improper proceedings." 

Then followed a recital of alleged German illegal 
acts in the war : the treatment of civilians in Belgium 
and France and of British prisoners in Germany; 



82 ECONOMIC ASPECTS OF THE WAR 

the laying of mines on the high seas ; the sinking of 
food vessels like the Frye, destined for Britain; the 
bombardment from the sea of British coast towns 
and the dropping of bombs from air craft on unforti- 
fied places ; and the sinking of British merchant 
vessels by torpedoes without warning. 

The British note then stated that considerations 
of humanity regarding food for the civilian popula- 
tion of a belligerent were inoperative when that bel- 
ligerent was blockaded. Apart from Great Britain's 
rights due to the blockade, it continued, such Ger- 
man authorities as Bismarck and Caprivi had stated, 
in contradiction to the British and American atti- 
tude, that pressure on a civil population was a proper 
means to bring war to an end. 

Moreover, there was a blockade, the note added, 
"effectively controlling by cruiser 'cordon' all pas- 
sage to and from Germany by sea." 

Again a few words of comment. Sir Edward Grey 
held that the published German note did not propose 
to stop the sinking of British merchant vessels by 
submarines. What the German note had said, six 
days before — and Sir Edward Grey could not have 
been ignorant of it — was this : 

"The German Government would undertake not to 
use their submarines to attack mercantile (vessels) 
of any flag, except when necessary to enforce the 
right of visit and search. Should the enemy nation- 
ality of the vessel or the presence of contraband be 
ascertained, the submarine would proceed in accord- 
ance with the general rules of international law." 



THE BLOCKADE 83 

As for mines on the high seas, both belligerents had 
used them, and America had not protested. With 
one exception Germany in her note offered to forego 
using such mines, and that exception might have been 
eliminated by negotiation. 

As for the atrocity charges, they were matched by 
countercharges. But whatever their merits, they 
were entirely beside the point. And further, we had 
no interest in what Bismarck wrote to the Kiel Cham- 
ber of Commerce or what Caprivi said in the Reich- 
stag. Our conception of the rights of the civilian 
population of a belligerent to buy food from us 
coincided with the view that Britain had enforced 
when she was a neutral, with our own previous posi- 
tion, and with the view of civilized nations as set 
down in the Declaration of London. As to the 
blockade, the situation to which Great Britain ap- 
plied that term was not a blockade in any proper 
conception, and everyone knew that the so-called 
cordon was not "controlling all passage to and from 
Germany by sea." All this was made clear to Britain 
in our note of March 30. 

The blockade had been originated two weeks before 
Great Britain delivered this answer to our note. It 
was not originally called a blockade, but a measure 
to stop all movement of goods to or from Germany, 
or virtually an application of the law of contraband 
to all forms of merchandise, not only to goods moving 
to Germany but also to those leaving Germany. By 
a coincidence the British announcement of this meas- 
ure bore the same date — March 1 — as the German 



84 ECONOMIC ASPECTS OF THE WAR 

acceptance of our suggestion made jointly to the 
belligerents to modify their war on neutral trade. 

So on March 1 the blockade came into sight. On 
that date Sir Cecil Spring-Rice handed our Secretary 
of State a memorandum referring to the German 
submarine warfare, and announcing Great Britain's 
proposal for retaliation as follows : 

"Her (Germany's) opponents are therefore driven 
to frame retaliatory measures in order in their turn 
to prevent commodities of any kind from reaching or 
leaving Germany. The British and French Govern- 
ments will therefore hold themselves free to detain 
and take into port ships carrying goods of presumed 
enemy destination, ownership and origin. It is not 
intended to confiscate such vessels or cargoes unless 
they would otherwise be liable to condemnation." 

In the memorandum the word blockade was not 
used. On March 5 our State Department sent an 
answer to the communication. Our answer was less 
a protest than an inquiry as to the meaning of 
Spring-Rice's note. It was urged that Great Britain 
could not lawfully detain all vessels destined for Ger- 
many, except in the case of a blockade. If there was 
none, neutral ships should not be detained unless 
carrying contraband. We asked the British authori- 
ties whether they considered that a blockade existed 
or not. If there was none, how could Great Britain 
detain any goods from Germany to us on neutral 
ships? We admitted that the old-time "close-in" 
blockade might be impracticable by reason of the 
enemy's use of submarines and air craft but held 
that Great Britain should" state some limit to the 



THE BLOCKADE 85 

radius of blockading activity and not, for example, 
seize ships with German cargo when nearing New 
York. 

London answered in a note of March 15, the same 
date on which she rejected our proposition that both 
she and Germany return to international law. Our 
attention was directed to the March 11 Order in 
Council, enclosed with the March 15 note, this Order 
giving effect to the blockade policy announced in the 
Spring-Rice notification on March 1. The note 
further explained that Britain would interfere with 
no cargoes outside of European and Mediterranean 
waters. It was added that there would be no confis- 
cating of neutral cargoes for trying to pass the 
blockade, out of consideration for neutrals.* 

As the March 11 Order in Council provided the 
substitute for international law under which neutral 
countries have carried on up to the time of this writ- 
ing a sort of business with each other, and under 
which they are stopped from trading with Germany, 
the document must be considered with some care. 

It began by stating its purpose as a reprisal on the 
part of Britain and its Allies. No vessels sailing to 
Germany after the first of March, it declared, would 
be allowed to proceed to a German port. Unless such 
a vessel received a pass to proceed to some neutral 
or Allied port, the cargo must be discharged in a 

* However, neutral cargoes for Germany were to be con- 
fiscated if they consisted of anything on the swollen British 
contraband lists. That is, shipments to Germany were treated 
under the provisions of the October 29 Order in Council. 



86 ECONOMIC ASPECTS OF THE WAR 

British port and turned over to the marshal of the 
prize court. If the goods were not contraband of 
war, and were not requisitioned for the use of His 
Majesty, they should be restored by the prize court, 
on such terms as were deemed just, to the persons 
concerned. 

Any vessel sailing after March 1 for a neutral 
European port, having aboard goods of German 
ownership or destination, might be required to dis- 
charge such goods in a British or Allied port. After 
being discharged in a British port, if neither contra- 
band nor requisitioned by His Majesty's Government, 
they should "be restored by order of the court, upon 
such terms as the court may in the circumstances 
deem to be just, to the person entitled thereto." 

The Order then specified how a neutral might pro- 
ceed to get justice in the British prize court. It 
stated that nothing which it contained should be 
deemed to affect the liability of any vessel or goods 
"to capture or condemnation independently of this 
Order." That is, the Order in Council of October 
29 was not repealed. 

Finally, the last and most novel paragraph of the 
British Order was a bid for the support of neutral 
nations in facilitating the measures thus taken 
against Germany. This paragraph offered to relax 
the interference of Britain with commerce between 
America and European neutrals, if the European 
neutrals would persuade or force the steamship lines 
under their flags not to carry goods of German 
ownership or origin. The provision read as follows : 



THE BLOCKADE 87 

"Nothing in this Order shall prevent the relaxa- 
tion of the provisions of this Order in respect of the 
merchant vessels of any country which declares that 
no commerce intended for or originating in Germany 
or belonging to German subjects shall enjoy the pro- 
tection of its flag." 

Referring to this March 11 Order in Council, the 
British note which accompanied it reassured our 
Ambassador in these words : 

"I apprehend that the perplexities to which your 
Excellency refers will for the most part be dissipated 
by the perusal of this document." 

Far from "dissipating" American perplexities, 
the March Order in Council, like those that had 
gone before, infinitely increased them. 

Our protest was voiced in our note to Britain of 
March 30. We said in this communication that the 
Order in Council of March 11 would constitute a 
practical assertion of unlimited belligerent rights 
over neutral commerce, and an almost unqualified 
denial of sovereign rights of nations at peace. Bel- 
ligerent rights over neutral commerce, we urged, are 
limited. The belligerent has the right to visit and 
search these vessels, and to capture and condemn 
them if it is found that they are on unneutral ser- 
vice or carrying contraband of war. The belligerent 
may blockade the enemy's ports and coast, and cap- 
ture and condemn any vessel trying to break the 
blockade. It was even conceded that a belligerent 
may take into its ports for examination suspected 



88 ECONOMIC ASPECTS OF THE WAR 

vessels engaged in trade between neutrals. — But this, 
it was claimed, is the end of the rights of belligerents 
over neutral commerce. 

Moreover, even though a blockade should exist, all 
but absolute contraband shipments, it was main- 
tained, might be freely transported from the United 
States to Germany, through neutral countries. For 
the United States to forego this right would be in- 
consistent with the solemn obligations of our govern*- 
ment, and would be assuming an attitude of unneu- 
trality towards Germany. 

We protested against the announced blockade as 
including not only all the coast and ports of Ger- 
many, but also a great number of neutral ports. No 
matter if the "close" blockade could no longer be 
maintained, international law could still be followed. 
Ships should be allowed free passage through the 
blockading cordon, if destined to neutral ports. 
Absolute freedom from interference should be ac- 
corded to all trade from neutral ports to America, 
and to all trade from America to neutral ports 
excepting in absolute contraband in transit to the 
enemy. 

We denied that, whatever might be the illegal acts 
of Germany in the present war, there was any excuse 
for similar action on Great Britain's part, so far as 
such action affected neutral rights. 

Our note called attention to the fact that Scandi- 
navian and Danish ports could trade over the high 
seas with German Baltic ports, access to which 
Great Britain could not bar. We pointed out the 



THE BLOCKADE 89 

serious interruption of American trade that might 
result from the enforcement of the Order in Council. 
We counted on Great Britain to modify its severity^ 
and we reserved the right to exact reparation for 
every act of that country in contravention of inter- 
national law. 

The issue between London and Washington was 
thus sharply drawn. Wc contended for the freedom 
of commerce, for equal sovereignty with Britain on 
the high seas with the exception of certain rights 
which a belligerent might exercise under inter- 
national law. 

Great Britain delayed until July 23 its answer to 
the March 30 note, and then made no concession to 
our demands. 

This July 23 communication contended that the 
British blockade measures were reasonable, necessary 
and "adaptations" of the old principles of blockade. 
In view of the shocking methods of German warfare, 
it continued, the Allies felt the obligation to take 
every means in their power to overcome their common 
enemy. Further, the British understanding of our 
March 30 note was that we admitted the necessity of 
Britain taking all steps to cripple the enemy's trade, 
though we criticised the methods employed. 

It was insisted that the blockade would be ineffect- 
ive if not extended to enemy commerce moving via 
neutral ports. It was denied that the United States 
could expect Britain to make such a modification of 
its blockade practices. The Bermuda cases of Civil 
War time (reviewed in Chapter IX) were cited as 



90 ECONOMIC ASPECTS OF THE WAR 

illustrating an extensive application of the law of 
blockade by the United States itself.* It was insisted 
that England had the right to extend the law of 
blockade to fit the peculiar situation of Germany, 
surrounded and served as it was by neutral ports. 
The sole obligation of Britain in the matter was said 
to be the obligation not to molest bona fide neutral 
trade. The reason why the British action was not 
directly supported by written authority was, it was 
declared, because it was the business of writers on 
international law to formulate existing rules and not 
suggest adaptations to meet altered circumstances. 

The note insisted that the British adaptations of 
old rules were in accordance with the general princi- 
ples of law and that "unnecessary injury to neutrals" 
was being avoided. It was asserted that our March 
30 note exaggerated the degree of British interfer- 
ence with our trade with neutrals. It was denied that 
there are "certain now clearly determined rights" of 
belligerents which belligerents may not overstep. 
These rights were stated to have been variously 
exercised in the past. The method of exercising 
the right of blockade, the note went on, might vary 
with the circumstances of the case. The right itself 
was by effective means to shut off the commerce of an 
enemy. So with the principle of contraband and its 
applications, which must change to meet conditions. 

*In this July 23 note, England did not again (as in its 
February 10 note) cite the Matamoros cases, the real Civil War 
parallels to the British blockade situation. As we shall see, 
these cases are directly opposed to the British contention. 



THE BLOCKADE 91 

As for the reminder in the March 30 note that 
according to the Declaration of Paris "free ships 
make free goods," the British reply said that Eng- 
land was interfering with goods because of German 
destination or origin, not because of German owner- 
ship (which according to the Declaration of Paris 
was insufficient to justify seizure). 

His Majesty's Government then expressed its satis- 
faction that the measures being enforced had had 
no detrimental effect on the commerce of the United 
States. 

"Figures of recent months show that the increased 
opportunities afforded by the war for American com- 
merce have more than compensated for the loss of 
the German and Austrian markets." 

The note was a clear rejection of all our demands. 
A few of its points call for comment. No shocking 
methods of German warfare are a reason for a bellig- 
erent abridging the clear trade rights of neutrals. 
As for our use of the principle of continuous voyage 
in the Bermuda cases, we did not invent the principle 
but took it over from British practice. Our Supreme 
Court in the Matamoros cases specifically halted us 
from such a distortion of the principle as Britain 
now makes : namely, the blockading of a neutral port 
to prevent even non-contraband from moving over- 
land to the enemy. 

The British plea of necessity and altered circum- 
stances sounds like the German justification of the 
terrors of their submarine warfare, or of their march 
through Belgium. The reference to the flourishing 



92 ECONOMIC ASPECTS OF THE WAR 

condition of our export trade did not impress us. 
The total figures of our exports were indeed large, 
but the presence of a large volume of mushroom trade 
like war orders did not compensate for the enormous 
loss sustained by such great interests as cotton. 
Above all, large exports to the Allies did not soothe 
our feeling that the principle of neutrality was being 
violated when we supplied the Allies and yet allowed 
them unlawfully to prevent us from trading with 
the Central Empires. 



CHAPTER VI 

Some Effects and Aspects of the Blockade 

Since the blockade was instituted, there has been 
a continuous series of seizures, detentions, confisca- 
tions or purchases. To further "legalize" its actions 
the British Government adopted on March 23 a new 
development in "international" law — as usual an 
Order in Council — already described in connection 
with the Wilhelmina case. This Order provided that 
the cargo of any neutral ship in a British port, 
which had not yet been condemned, might be requisi- 
tioned. Any vessel bound from the United States to 
any port in Europe might be brought into a British 
harbor in accordance with the terms of the March 11 
or October 29 Orders in Council. If Great Britain 
could find no ground for condemning a cargo from 
the United States to a neutral country, it could now 
purchase that cargo and prevent it from reaching 
its destination. 

After March 30 all seizures by the British Admir- 
alty of neutral vessels sailing from America for 
neutral ports were in defiance of the attitude of our 
government, excepting as the seizures were made for 
the purpose of discovering absolute contraband for 
Germany whose presence might be justly suspected. 

A few instances will illustrate the policy of deten- 



94 ECONOMIC ASPECTS OF THE WAR 

tion. On March 30 the Danish steamer Louisiana 
left New York for Copenhagen. On April 16 she 
was taken to Kirkwall. On April 26 she was ordered 
to proceed to Hull, where the foodstuffs in her cargo 
were to be passed on by a prize court. On March 24 
the Lapland sailed for Copenhagen. On April 9 
she was seized and taken to Kirkwall; on April 14 
she was transferred to Barrow, where her provisions 
were unloaded and thrown into court. 

It is recalled that five ships of the American Gans 
Steamship Company were detained in November, and 
after many adventures succeeded finally in getting 
their case set for June 7. By the middle of May 
twelve other steamers, with provisions for Scandi- 
navia to the value of $11,000,000, lay in British 
ports. All the expenses of delay rested upon Ameri- 
can packers. Those in this country who knew the 
facts were indignant. 

We have already reviewed the April 13 pro- 
ceedings in the British prize court regarding the 
detained meat cargoes. Though they were detained 
in November, the British Government was not ready 
to go on with the cases in April. The scandal of 
those proceedings reached this country in the letter 
correspondence of the Associated Press, though the 
British censors prevented cable news of it from 
crossing the Atlantic. 

In May the British Government was disturbed at 
the growing discontent in America because of the 
detention policy, and also because Mr. Urion, who 
had been in England representing the packers and 



EFFECTS OF THE BLOCKADE 95 

who had failed to get satisfactory action, was de- 
parting for America to see what could be done in 
Washington. With the double purpose of discount- 
ing what Mr. Urion might say and forestalling an 
American note on detention, on Ma$ 21 the British 
Foreign Office issued a statement\,to the American 
press correspondents in London, wnich was promptly 
cabled to this country. The cabled account reached 
the United States two days before Mr. Urion did. 

The British statement began by saying that only 
three American-owned ships were detained in Eng- 
land. The first of these was the Joseph W. Fordney, 
captured off the coast of Norway. This vessel was 
detained, it was stated, because she apparently tried 
to evade the patrols of His Majesty's Government. 
It was declared that the consignments of the Joseph 
W. Fordney were addressed to a person in Sweden 
who was suspected by the British Government of 
supplying food to Germany. 

It was then stated that of thirty-six detained ships 
with American cargoes aboard, twenty-three had 
cotton cargoes. The announcement said that none of 
the cargoes had been stopped excepting when des- 
tined directly to Germany, or when there was suspi- 
cion that the cotton was moving to Germany via a 
neutral country. "It was never suggested," the 
author of the statement continued, "that vessels or 
cargoes with an enemy destination should be allowed 
to proceed." 

With regard to provisions, Great Britain, it 
appeared from this British statement, had been 



96 ECONOMIC ASPECTS OF THE WAR 

carrying on negotiations with American packers for 
the purpose of getting them to limit their shipments 
into neutral European countries to the amounts 
actually required in those countries for home con- 
sumption. It was added, however, that the packers 
made their acceptance of these terms conditional 
upon the purchase by the British Government of the 
detained Scandinavian cargoes, at the prices for 
which they would have sold in Scandinavia. The 
demand was considered exorbitant. Therefore it 
was proposed to send these cases through the prize 
court. 

The familiar British argument was then adduced, 
that according to trade statistics America could 
not be suffering in the matter of its exports of food- 
stuffs. It was stated that in February, 1915, our 
exports to European neutrals increased more than 
our exports to Germany and Austria decreased, and 
note was taken especially of a large increase in the 
export of lard and bacon to Scandinavian and Dutch 
ports, the intimation being that some of this mer- 
chandise was reaching Germany. 

In all British procedure regarding us there is 
nothing more annoying than the apparent assump- 
tion that we can be silenced by the money argument. 
It is the argument that appeals to those who have 
no principles. But our whole contention in the food- 
stuffs matter is a question of principle. That was 
the basis of our March 30 note. Moreover, our 
March 30 note insisted on the right without hin- 
drance to send foodstuffs, provisions, into Germany 



EFFECTS OF THE BLOCKADE 97 

via Scandinavia. Therefore how were we to be 
influenced by an argument that the large quantities 
of lard moving to Scandinavia caused suspicion that 
lard might be trickling through to Germany? We 
had expressly denied that this was cause for lawful 
suspicion or detention. 

After this utterance of the British Foreign Office, 
the packers promptly explained their side of the 
matter. The British Government, they said, wanted 
the provisions auctioned in England and the pro- 
ceeds handed to the shippers. The latter objected 
to this. First, the provisions were packed for the 
Scandinavian market, not the British. This meant, 
for example, that the bacon contained far more fat 
than England would wish for. To sell Scandinavian 
provisions in the British open market would mean 
certain loss to the American packers, under the best 
conditions. The dumping of $11,000,000 of meat 
products on any market would depress its prices to 
abnormal levels. The packers thought that Britain 
should pay them the contract price of the cargoes. 

Surely Great Britain could not have been count- 
ing on a supposed American sentiment against the 
Chicago packers, which was expected to influence 
this country against any intervention on their be- 
half. This would explain the difference in treatment 
afforded by Great Britain with reference to cotton 
and to cargoes of provisions destined for European 
neutrals. England promised to purchase cotton 
cargoes at the price contracted for in Europe, while 
with regard to provisions this treatment was refused. 



98 ECONOMIC ASPECTS OF THE WAR 

— But the British Government must have recognized 
that, after all, our packers are the selling agents 
abroad for the meat products of American farms. 

On May 24, representatives of the Chicago pack- 
ers met in Washington. Their agent had returned 
from London with the story of his months of fruitless 
effort to get provision ships through the prize court. 
On the evening of the 24th they met the Secretary 
of State, and a meeting was arranged for the follow- 
ing day between representatives of the meat men, of 
the State Department and of the British Embassy. 

This meeting, however, did not solve the problem. 
A public statement was prepared, but the packers 
decided not to issue it. So far as we have informa- 
tion of the May 25 proceedings, the British repre- 
sentatives would not consent to the purchase of the 
provisions by their government at the Scandinavian 
contract prices, while the packers would not consent 
to limit their exports of provisions to Scandinavia 
to the amounts which Britain deemed normal. How- 
ever, a tentative agreement was reached regarding 
future shipments. The packers consented to notify 
British officials in this country a reasonable time be- 
fore they shipped their goods. The British were to 
be given a fair opportunity to ascertain the bona 
fide neutral destination of these shipments. This 
being ascertained, the British officials here were to 
certify the shipments, and they were to be free of 
detention. But the British home government never 
accepted this arrangement. 

By the month of July, 1915, there were $14,000,- 



EFFECTS OF THE BLOCKADE 99 

000 of provisions for neutral Europe held up in 
England. Their cases in the prize court had been 
repeatedly postponed at the request of the British 
Attorney General. Settlement looked as remote as 
in November, 1914. Since the Washington confer- 
ence in May, the British Government had made 
another unacceptable proposition to the packers ; 
namely, the government offered to withdraw the cases 
if the goods would be sold in England and if the 
packers would guarantee the British Government 
both against claims for detention of the ships and 
claims on the part of neutral European buyers who 
had never received goods which they had paid for. 

Therefore on July 14, 1915, representatives of 
the packers again called on the State Department 
at Washington. On July 16 the long postponed 
hearing of the provisions cases was to be resumed in 
the London prize court. Both the April 13 hearing 
and later events gave clear indication that the prize 
court would treat the cargoes under the Orders in 
Council, in disregard of what we considered our 
rights under international law. So on July 15 our 
government sent the so-called "caveat" note to Eng- 
land, intended partly for the information of the 
prize court. 

In view of the difference of opinion apparently 
existing between England and America regarding 
the principles of international law governing prize 
court procedure, Ambassador Page was asked to 
inform England that we should recognize no action 
of its prize courts proceeding under British munici- 



100 ECONOMIC ASPECTS OF THE WAR 

pal enactments (Orders in Council) and not under 
the recognized principles of international law. 

The answer to this warning came on July 31. 
The British Government declared itself unaware of 
any differences between America and England as 
to the principles of law applicable to prize courts. 
It was asserted that in both countries these courts 
were subject to the instruction of their sovereign 
and, in the absence of such instruction, to the gen- 
eral rules of international law. A decision of Lord 
Stowell was cited stating that there is no inconsis- 
tency in the duty of the court to enforce at the same 
time the King's Orders in Council and the established 
rules of law, because the Orders are never in conflict 
with that law. The judge said he could not "with- 
out extreme indecency" contemplate or discuss his 
course in the impossible emergency that a conflict 
between the old and the proposed law should arise. 

It was pointed out that United States citizens, 
if dissatisfied with the decision of a British prize 
court, might appeal to His Majesty's Council. If 
retrial were there denied, recourse might be had 
to an international tribunal. The hope was ex- 
pressed that this note might relieve the misappre- 
hensions under which the American Government 
seemed to be laboring with regard to the principles 
of law applied in British prize courts. 

At present the packers will sell to neutral Europe 
only on terms of cash before shipment. The buyer 
must take the risk of British detention and perhaps 
confiscation. It is a risk no one dares to assume. 



EFFECTS OF THE BLOCKADE 101 

No regular steamship line to Scandinavia will accept 
meat products unless certified as to Scandinavian 
destination by a representative in America of the 
Scandinavian country, and also by a British consul.* 

It should be noted also that the British notification 
on March 1, that shipments to and from Germany 
would be seized, resulted at once in a modification of 
insurance contracts — even those of our own Govern- 
ment War Risk Insurance Bureau — declaring the 
insurance void in the case of goods proving to be of 
German destination, ownership or origin ; and insur- 
ance on such goods is still unavailable. 

With respect to the consular certificates de- 
manded on meat shipments to neutral countries, it 
must be observed that these certificates, with the 
further evidence even of the seal of Great Britain 
placed by a British consul on the hatches of vessels, 
are regarded by the English naval officers only as 
collateral evidence ; they do not exempt from search. 
Moreover, British pressure has forced Scandinavian 
consignees to give the most stringent guarantees as 
to the home consumption of American shipments, 
before these shipments may be delivered at the 
Scandinavian port. 

Denmark, for example, has two lines from the 
United States : the Interocean Transportation Com- 
pany and Det Forenede Dampskibs Selskab (the 
Scandinavian- American Line). 

*On May 3 the British Embassy at Washington issued a 
statement of instructions to American exporters as to how to 
ship to neutral Europe. It is printed in Appendix, p. 325. 



102 ECONOMIC ASPECTS OF THE WAR 

The Interocean makes the American shipper attach 
to his bill of lading a sworn affidavit to the effect 
that his statement of the merchandise shipped is 
true, and that it has positively no other destina- 
tion than the named consignee. The Scandinavian- 
American Line has the following in its bill of lading, 
printed in red: 

"Consignees of the within goods are under the 
obligation to furnish Det Forenede Dampskibs Sel- 
skab at Copenhagen promptly and on demand a 
written declaration that the within goods are for 
consumption in country of destination shown in this 
bill of lading, and will not be re-exported. A failure 
to provide such a declaration gives the shipowner 
the right to withhold delivery of the goods or dis- 
charge them at any place, whereupon each and every 
liability of the shipowner shall cease." 

Yet this is not the end. Britain has forced the 
Danish lines to deliver only to those Danish con- 
signees who submit to having their books examined 
and approved by an accountant appointed by a 
British official in Denmark. This accountant is to 
be paid by the Danish merchant. His purpose is 
to see where the goods of the merchant go. Before 
the merchant gets American goods from the steamer 
he must deposit in a bank money equal to the vahie 
of the goods. This money is forfeited to the British 
consulate if the merchant fails to see that the ac- 
countant certifies the disposition of the shipment. 

The official British ruling on this point, enforced 
by the steamship lines, is of interest. The merchant, 



EFFECTS OF THE BLOCKADE 103 

it is ordered, must agree to the appointment by the 
British consulate of a chartered accountant 

"to examine books and business in order to satisfy 
itself (the consulate) as to the actual disposal of 
the consignment ; and deposit of a bank guarantee of 
full value of the consignment, to be forfeited to His 
Majesty's consulate in case of non-fulfillment of 
declaration. Expenses of chartered accountant to 
be borne by the company." 

There is only one way out of this labyrinth into 
which our legitimate commerce has been forced to 
wander. No one but the United States Government 
knows the way. No European neutral is strong 
enough to resist whatever use Britain may choose 
to make of her sea power, for every European neu- 
tral is dependent upon imports of our food which 
must pass by British warships. No European 
neutral has said that it would resist Britain or dared 
to say it. We have dared to say this. In our 
March 30 note we have declared as subversive of 
international law interference with our commerce 
with neutrals ; and we have said we cannot stop 
shipping food to Germany via neutrals without vio- 
lating the neutrality we choose to observe. 

This matter of the right to ship food and other 
non-contraband to Germany is the crux of the whole 
situation. Once insist upon that and the whole struc- 
ture of interference with our neutral commerce 
tumbles like a house of cards. Once admit, even 
tacitly, the right to interfere with food to Germany 



104 ECONOMIC ASPECTS OF THE WAR 

and the whole British structure of interference is 
the logical law of the sea. 

If Britain may lawfully stop our food for Ger- 
many via neutrals, it may, if it can, force those 
neutrals to place export embargoes on the food for 
Germany. 

If food from the United States may not go 
through Denmark to Germany, it is virtually contra- 
band. 

Then Britain cannot be blamed for detaining, 
searching and annoying our shipments to Denmark; 
for they then carry contraband and by law Britain 
may use every means to prevent contraband from 
moving into Germany. To prevent the losses to 
steamers due to such detentions, steamship lines are 
bound to protect themselves against the possibility 
of carrying shipments that will be viewed suspi- 
ciously by Britain. In order to be allowed to get 
goods, Scandinavian merchants naturally submit to 
any procedure that will make them personae gratae 
to Britain. In order to be allowed to ship goods, 
American exporters naturally turn to His Majesty's 
Government for guidance as to the conditions under 
which they may ship to neutral countries. 

For many reasons the United States should act. 
It should force Great Britain to allow our foodstuffs 
to reach Germany, and thus remove the intolerable 
suspicion that adheres to our shipments to European 
neutrals. Great material interests are involved. 
The genuineness of our neutrality is at stake. And 
apart from the questions of neutrality and interest 



EFFECTS OF THE BLOCKADE 105 

in the present crisis, we must remember the constant 
menace in the future of such precedents as Great 
Britain has sought to establish, all tending toward 
the one conclusion that the nation dominant in sea 
power may adopt in restraint of commerce any 
measure it sees fit. 

It is perhaps worth while to picture a situation 
where, with sea power differently distributed and 
other belligerents engaged, the latent danger of the 
precedent now being established would come to light. 

Suppose in a future war that Japan's fleet rules 
the high seas and that Japan is at war with England. 
Japan decides to starve England, since that is 
simpler and less strenuous than defeating England 
by military force. Japan therefore declares a 
blockade of England. Its blockading cordon, how- 
ever, because of the efficiency of the British sub- 
marines, is not able to invest the British ports, 
operate around the British Isles or even hold the 
North Sea. Great Britain undisturbed trades over- 
sea in that direction. However, the Japanese 
squadrons, a thousand miles off the British coast or 
even across the seas, intercept Argentine grain and 
meat as it leaves Buenos Ayres. Japanese ships 
stop and confiscate Australian mutton and Indian 
wheat long before they reach England. 

These ships also hold up and appropriate all 
American exports of wheat, flour and provisions, on 
their way to England across the Atlantic Ocean. 
They stop not only the exports destined for England 
but also those destined for the rest of Europe, on 



106 ECONOMIC ASPECTS OF THE WAR 

the ground that they might in some way get to 
England. All during these hold-ups of American 
commerce, Russian grain would move unhindered to 
Great Britain, for Japan could not hold the North 
Sea. Danish provisions would supply the market 
which once Americans held. England would not 
starve. It would be American citizens dependent on 
the British market who would starve. 

If the British blockade of Germany be admitted 
as valid, the entire law of blockade as evolved from 
centuries of experience will be abolished, and the 
possibilities of the future contain endless menace. 
England does not invest the German coast. She does 
not invest anything. The blockade does not affect 
all neutrals. Some are quite free from it. Norway 
and Sweden trade with the Baltic ports of Germany 
as if there were no war, for Germany, not England, 
holds the Baltic. A Swedish exporter of lumber can 
send it unmolested over the high seas from Gothen- 
burg to Stettin, a German Baltic port. But if a 
Mobile exporter shipped a cargo to Stettin it would 
never arrive. England would seize it as it passed 
the British Isles. 

England blockades, not all commerce with the 
German Baltic ports, but only such commerce as 
can be reached by British cruisers without too inti- 
mate association with German mines and torpedoes. 
That is, the precedent is being established that it is 
right and lawful for a belligerent with some degree 
of sea power to ban our trade if it can intercept our 
trade, whether it can so intercept the trade of other 



EFFECTS OF THE BLOCKADE 107 

neutral nations or not. This is a new definition of 
blockade. The word blockade means nothing under 
such circumstances. Instead of a blockade, such 
action means an intolerable interference. 

Were Japan or any other country so to shut off 
our food exports to England, the wheat farmers 
would feel the same distress that has come upon the 
cotton planters in the struggle of the Allies with 
Germany. 

Nor is our acquiescence in the present order of 
things in accordance with our precedents, especially 
with our profession of the obligation to supply food 
to both belligerents if our neutrality is to be unim- 
paired. 

In 1793, England, then, as now, without main- 
taining a legal blockade, undertook to capture all 
food products bound for France. The instructions 
of our then Secretary of State, Thomas Jefferson, 
to Thomas Pinckney, our Minister to Great Britain, 
are illuminating today. Asserting that "no nation 
can agree, at the mere will or interest of another, 
to have its peaceable industry suspended and its 
citizens reduced to idleness and want," Jefferson 
continued : 

"Were we to withhold from France supplies of pro- 
visions, we should in like manner be bound to withhold 
them from her enemies also, and thus shut to our- 
selves all the ports of Europe where corn is in de- 
mand, or make ourselves parties in the war. This is 
a dilemma which Great Britain has no right to force 
upon us, and for which no pretext can be found in 



108 ECONOMIC ASPECTS OF THE WAR 

any part of our conduct. She may, indeed, feel the 
desire of starving an enemy nation, but she can have 
no right of doing it at our loss nor of making us the 
instruments of it."* 

It is of interest to note that from September of 
1914 to May, 1915, inclusive, we exported foodstuffs 
to the values of $395,700,000, or $241,600,000 more 
than during the same period of the year preceding. 
The larger part of these exports went to England. 
What if we should decide today that an abandon- 
ment of our right to send foodstuffs to Germany 
means that "we should in like manner be bound to 
•withhold them from her enemies also? 

In the reorganization of the British Cabinet in 
May, 1915, two members were added who, to be 
consistent, must support America's contention re- 
garding the illegality of the present form of the 
British blockade. These new members are Mr. Bal- 
four, head of the Admiralty, and Lord Lansdowne. 

In our March 30 note to Great Britain, we de- 
clared our right to trade with Germany via neutral 
countries even if a blockade of German ports were 
maintained. To renounce this right, we declared, 
would be to renounce our neutrality. But we denied 
that Britain was maintaining a legal blockade. We 
stated its weakness in these words : 

"The Scandinavian and Danish ports, for example, 
, . . are free, so far as the actual enforcement of the 
Order in Council is concerned, to carry on trade with 

* For the full text of Jefferson's letter, see Appendix, p. 318. 



EFFECTS OF THE BLOCKADE 109 

German Baltic ports, although it is an essential ele- 
ment of blockade that it bear with equal severity 
upon all neutrals." 

In other words, we declared that England had no 
right to bar our commerce with German Baltic 
ports. 

Mr. Balfour, before he joined the Cabinet, pub- 
licly admitted the truth of this contention. We 
must, therefore, support our case in the new Cabinet. 
In an interview cabled from London to the New 
York Times on March 27, discussing this novel 
feature of the British blockade, he ably explained 
the rule that a blockade must bar the commerce of 
all neutrals with a belligerent : 

"It (this rule) is designed to prevent the blockad- 
ing power using its privileges in order to mete out 
different treatment to different countries, as, for 
instance, by letting the ships of one nationality pass 
the blockading cordon while it captures the ships of 
another. Such a procedure is on the face of it unfair. 
It could have no object but to assist the trade of one 
neutral as against the trade of another and arbi- 
trarily to redistribute the burden which war un- 
happily inflicts on neutrals as well as on belliger- 
ents." 

Mr. Balfour, while agreeing that England's pres- 
ent blockade violates this principle, offered the excuse 
that "the discrimination, if it may be so designated, 
is not the result of deliberate policy but of a geo- 
graphical accident." 



110 ECONOMIC ASPECTS OF THE WAR 

But this defense did not even convince Mr. Balfour. 
He finally admitted: 

"But, after all, it is the equity of the Allies' case 
rather than the law which mainly interests the think- 
ing public of America and elsewhere." 

Again, this is the assumption that Britain is fight- 
ing our battle and we must therefore let her do as 
she pleases in destroying our commerce as a means 
to attain her end. 

If, then, there is no blockade which we can, as 
neutrals, admit, and none which the first Lord of 
the Admiralty in the British Cabinet can defend, we 
turn to another distinguished British statesman to 
learn what our rights are. It is recalled that, at the 
time of the Boer War, Lord Salisbury stated that 
conditional contraband could not be stopped by a 
belligerent unless shown to be destined to the military 
of the enemy. 

At this point the second member of the British 
Cabinet, Lord Lansdowne, tells us our further rights 
in the matter. He tells us that we must not recog- 
nize the action of a belligerent (an English) prize 
court which stops our foodstuffs (to Germany) in 
violation of the principle Lord Salisbury laid down. 

It is remembered that in 1904 Russia seized food 
destined to the civil population of Japan. Lord 
Lansdowne, we recall, then Foreign Secretary, wrote 
a letter to Joseph Choate describing the warning 
issued to Russia. 



EFFECTS OF THE BLOCKADE 111 

"His Majesty's Government further pointed out 
that the decision of the prize court of the captor in 
such matters, in order to be binding on neutral states, 
must be in accordance with the recognized rules and 
principles of international law and procedure." 

That is, Lansdowne seems to say that every one 
of the hundreds of British seizures of vessels with 
American cargoes would have been illegal even if 
they had been destined for Germany. In the Cabi- 
net he must contend that the British seizures of our 
exports to neutral ports were doubly beyond the 
pale of all law. 



CHAPTER VII 

Starting the Cotton Movement 

In the production, ginning and warehousing of the 
annual cotton crop, direct employment is given to 
more than four millions of people, and a livelihood to 
many more. Upon the successful growth and upon 
the prompt and satisfactory marketing of cotton are 
dependent all other business interests of the South, 
and the earning power of thousands of miles of rail- 
way. Moreover, since the South depends upon cotton 
for its ability to purchase other goods, any deficiency 
in growth, depression of values or interference with 
marketing means an immediate adverse affect upon 
agricultural, mercantile and manufacturing activi- 
ties in the rest of the country. 

It happens that successful marketing of the cotton 
crop depends primarily upon getting it into the 
export trade. In recent years two-thirds of the 
cotton crop has been exported and only one-third 
consumed in this country. 

Interference with the foreign movement is thus the 
most serious evil that can befall the South, far worse 
than a partial crop failure due, for example, to the 
boll weevil. If the foreign market is open, high 
prices are paid for the cotton that escapes a crop 
failure. The total cotton value is thus often as large 



STARTING COTTON MOVEMENT 113 

in years of partial crop failure as in years of heavy 
yield. The twelve million bales of 1910 were worth 
$100,000,000 more than the 16,250,000 bales of 
1911. But if the foreign market or any essential 
part of it is closed, ruinously low prices greet every 
participant in the crop. In the midst of apparent 
plenty, everyone is in want. 

Such a result in the South was brought about in 
the fall of 1914, because of the European War. 
England, the largest consumer of our cotton, nor- 
mally takes 3,500,000 bales per year, over one-third 
of our total cotton exports. Germany and Austria 
come next and normally take from 2,500,000 to 
3,000,000 bales of cotton, nearly one-third of our 
exports. The war would inevitably have affected 
the cotton trade adversely. But the effect was 
accentuated by the threatening attitude of England 
towards our commerce, which kept the German 
market for cotton closed until the winter months. 

The pressure in the South of those 3,000,000 bales, 
for which exit was long denied, helped force the price 
of cotton down to 6 cents per pound. The cost of 
producing is supposed to average about 8 cents. 
At this low price of 6 cents, thousands of the little 
cotton farmers, the rank and file of the South, were 
forced to part with their product. They had not 
the financial power to hold the cotton until, along 
in the spring of 1915, its price rose to 10 cents, 
owing to a temporary reopening of the path to Ger- 
many, the broadening demand of other countries and 
the activities of our own mills. It was the laro-e 



114 ECONOMIC ASPECTS OF THE WAR 

planters, dealers and English importers who were 
able to hold the cotton and profit from the advance. 
The farmers were hard hit. 

The cotton year starts August 1. About that 
date begins the export movement of the new crop. 
In the second half of July, 1914, "spot cotton" — 
that is, cotton for immediate, not future delivery — 
was selling in New York for 13^ cents per pound; 
on July 27, with war threatening, it was 12^ cents. 
Two days later, with war certain, this price had 
dropped to 11% cents. On July 31 the New York 
and New Orleans Cotton Exchanges closed. 

With the entrance of England into the war on 
August 4, shipping was paralyzed. Most of our 
commerce has been carried in British and German 
ships and no such ship dared venture out to sea 
because both English and German cruisers were on 
the North Atlantic. The ordinary marine insurance 
carried on the hulls and cargoes of these ships did 
not protect them against the danger of capture or 
destruction. Against this new peril, war risk insur- 
ance was necessary. 

The German ships never sailed again, but kept 
their American ports, being so much tonnage with- 
drawn from the carrying trade. Some British ships 
were chartered by their government for war ser- 
vices. The remainder were in a position to sail when, 
a short time after August 1, the British Government 
insured against war risk British vessels carrying for 
the United Kingdom ; and when, two weeks after the 
outbreak of the war, the British Admiralty an- 



STARTING COTTON MOVEMENT 115 

nounced that the North Atlantic route was free of 
German cruisers. This partially solved the prob- 
lem of getting American cotton exported to Eng- 
land. But the method of financing such shipments 
also had broken down. A cotton exporter gets his 
money by selling to his bank a draft drawn on the 
English buyer or the latter's bank. Owing to the 
disturbance of international finance and the paraly- 
sis of the London discount market, such drafts be- 
came for a time unsalable. Yet in the course of a 
few weeks this financial difficulty was largely over- 
come, at least as to shipments which could be satis- 
factorily insured, and cotton for England went for- 
ward in a volume that was substantial, though below 
normal. 

The following table shows the exports to England 
up to June 1, 1915, compared with exports to Eng- 
land in the corresponding months of 1913-1914. 



Comparison of Cotton Exports to England, by Months, 
1913-1914 and 1914-1915. In Bales 



1913-14 1914-15 

August 77,488 6,370 

September 376,426 50,980 

October 514, 105 232,065 

November 530,355 333,700 

December 473,028 572,396 

January 437,231 585,534 

February 328,794 633,574 

March 264,999 440,490 

April 147,298 378,828 

May 140,618 359,675 

Period Aug. 1 

to May 31 . . . 3,290,342 3,593,612 



Changes 1914-15 

Decrease 71,118 

325,446 

" 282,040 

196,655 

99,368 

148,303 

304,780 

175,491 

231,530 

219,057 



Increase 



303,270 



116 ECONOMIC ASPECTS OF THE WAR 

All this meant that in the early months of the 
shipping season, the months vital in fixing the price 
paid the farmer, the largest purchaser of American 
cotton was not buying. Therefore, there was double 
reason why the second largest purchaser, Germany, 
should without hindrance take its share. 

For reasons to be explained, direct shipments to 
Germany were at first very difficult. Hence during 
the early months of the export season, beginning 
August 1, cotton had to move into Germany via 
adjacent neutral European countries. That is, 
instead of being shipped from the United States to 
Hamburg or Bremen, cotton was shipped to Genoa, 
Rotterdam or Copenhagen and forwarded to Ger- 
many overland. Or it was shipped to Norway or 
Sweden, particularly to Gothenburg, and thence 
forwarded to Germany by sea. 

In the month of October these indirect shipments 
into Germany began to go forward and appeared in 
our export figures, which showed an increase in ship- 
ments to the neutral countries adjacent to Germany, 
compared with the corresponding shipments in the 
same month of the year before. But not until Jan- 
uary did these increases, representing cotton for 
Germany, begin to compensate for the loss in direct 
shipments. This whole situation is illustrated by 
the following table: 







r 






— I CD 


«5 


t- 


«* 


OS 


,_, 


OS 








xa 




©» >-H 


•* 


Os 


to 


o 


«o 


■* 








*? 




O r-t 


t- 


-* 


00 


«: 


OS 


CD 








^ 


*<*■ 

V 


go" o" 


*s 


eo" 


©f 


©>" 


b-T 


O 








*-n 


i-i ©) 


«* 


■* 


CO 


G} 


«3 


t- 




e 


On 


«0 






i— i 


©1 


"* 


■* 


oo 


w 

M 




*-( 


*H 
















1 
1 




8 


as <0 

CO co 
cS cj 
V 03 

u o 
<u co 

fl P 


o 

co 

03 
CD 
>-. 


03 

CO 

a 


03 
co 

o3 
03 
»-> 


03 

to 

si 
03 
u 


03 

CO 

cS 
03 


03 
CO 

a3 
03 
u 


>—i 


8 


Si 


CJ 


o 


u 


u 


eg 


CJ 


p 


■8 


fcq 




a 


c 

I— 1 


a 


a 
i— i 


a 

h- 1 


c 

1— 1 


a 

«! 


4 

| 




i ^ 


to oo 


OS 


09 


-* 


i— i 


©* 


to 


H 




h 


■* ■* 


OS 


■* 


^H 


CO 


*o 


i~ 


O 






-i. 


©< *0 


I— 1 


-* 


to 


to 


to 


o 




,© 




s nT 
















tq 




>i 


©T oo 


t~ 


-* 


«* 


i-H 


oo 


«? 




Oi 


00 


o 


©) 


«o 


OS 


o 


©» 


Q 


i> 




H 




I— 1 


cn 


oo 


-* 


»o 


«* 


W 
% 


8 




** 


t- to 


"* 


«5 


o 


©1 


i— i 


t~ 


< 








H 


to to 


«5 


■>* 


•Q 


Jn- 


o 


«3 








3 


G* nO 


•* 


OS 


t- 


i—i 


t- 


to 


rt 








>H 


«s oo" 


©T 


© 

en 


i— 1 


oT 




■* 



o 



H 

S 



o 

o 
O 



n 



$ 



CJ H«5»COS)i5^itj 



t9U)!00(Su)a(s 
H O b- M IN O ^ © 

is ■* <o n in h (^ 



i? ©* 



«5 



** 



» M » S 

fe ,_l 2 •"" 

o a «i h 



«J » O OD oo t- * 

«j cn <* a to * ■* 

t- 00 ©> OS OS r- 1 

■#" h ce o co" s* co" 

01 » K «3 o, C» o^ 
©» ^ «5 00 00 ^> ©1 



» » ; >. 

-9 ^2 >» »H 

1 s S §■ 

£ S 3 ft 



oCri*3> U S n >h 

S &« 5 9 S OJ 



03 jj 






P 



,o 


^a 


«(-c 


bo 


T^H 


3 


05 


o 


CO 


-Q 


a 


H3 


o 

4-1 


a 

e8 


o 


»4 

S 


o 




a 


T3 






*j 


03 


03 


^=J 


T3 


to 

03 


C 

03 


P 


u 


CS 



^ a 



S 3 



p ^3 
S ^ 

CO a 

o 



a s 

"So 

o o 

q CD 



a ,»h 



a 1o 
a 
H 
>. 



3 03 

sp a 

fa s 

o 



118 ECONOMIC ASPECTS OF THE WAR 

The remarkable thing about the table of exports 
to England is that they show that the total exports 
of American cotton into England have been larger 
in the present year than in the past year. The 
increase for the August 1-June 1 was over 300,000 
bales. It was only in the early months of the war 
that cotton did not move in good volume to England. 

Moreover, the decrease in the total cotton move- 
ment into Germany and Austria has not been so large 
as many think. The drop in direct exports to Ger- 
many and Austria was 2,258,000 bales. But the 
increase in shipments via adjacent neutral countries 
was about 1,668,000 bales. So the real decrease in 
exports to Germany was perhaps not over 500,000 
bales, assuming — and we cannot quite assume — that 
Germany got all the excess exports moving to 
adjacent neutrals. 

It is recalled that the New York and New Orleans 
Cotton Exchanges closed on July 31. For later 
quotations on the price of cotton we are mainly 
dependent on individual transactions reported from 
different parts of the South. All tell the same story 
of sinking prices. 

Cotton had sold in New York for 11% cents in 
the last days of July. On August 10, southern 
shippers were willing to deliver it to New England 
factories for 11 cents. On August 21 it sold in 
Augusta for 10l/o cents, on August 26 for 9^> cents. 
On September 2 cotton touched 8 cents ; on October 
6, 1^/2 cents ; on October 12 it dropped to 6% cents ; 
and on October 19 sales from southern points were 



STARTING COTTON MOVEMENT 119 

reported at 6 to 6% cents per pound. This was a 
price of desperation. As a matter of fact, cotton 
on the farm was selling for 6 cents all during Sep- 
tember and October. These 6-cent sales are what 
finally forced the United States to act. 

If there had been the customary monthly regu- 
larity of movement from the United States to Eng- 
land and Germany, the price of cotton in this coun- 
try would not have dropped in any such manner as 
it did. The rapid fall was occasioned partly by the 
fact that in August and early September little cotton 
was bought or moved either to England or Ger- 
many. The fall was caused partially by the fear of 
Americans that England would not let cotton move 
to Germany at all. 

Just as long as England could, she fostered this 
impression, and she allowed a free movement only 
when an irresistible force was applied to her ; namely, 
the force of a direct demand from Washington. 
This demand, brought about by irate southern 
senators, was supplied with a promise of real con- 
sequences should it not be met. The story of the 
quiet English ban upon our cotton trade, and its 
removal in October, is worth reading. 

It is recalled that, under the codification of inter- 
national law represented by the Declaration of Lon- 
don, cotton was on the "free list" ; that is, it was one 
of those articles which could not be declared con- 
traband by any belligerent. The reason is obvious. 
It is a prime necessity for the life of civilians and the 
raw material for the greatest single peaceful indus- 



120 ECONOMIC ASPECTS OF THE WAR 

try of countries; namely, the textile trades. Upon 
the unhampered movement of cotton in international 
commerce depends the prosperity of the workers in 
great sections of the civilized world. Excepting 
after a complicated manufacturing process, cotton 
is not available for purposes of war. 

England, we know, in her Order in Council of 
August 20, adopted the Declaration of London as 
her rule of international law, with certain excep- 
tions. Cotton was not affected by the exceptions 
either in the August 20 Order or in any successive 
one. That is, England by announcement was 
pledged to consider cotton as a free good that could 
move unhindered to Germany in all but German ships 
or those of Germany's Allies. 

During August there was the same initial diffi- 
culty in getting cotton started for Germany as in 
getting it started for England. This cotton nor- 
mally moves in full shiploads in "tramp" steamers, 
chartered for the voyage. Most of these steamers 
are under the German or the British flag. Those 
under the German flag dared not venture on the 
seas, which England controlled. Those under the 
British flag were of course not available to carry 
cotton to England's enemy. That left for considera- 
tion ships of neutral countries : the United States 
and other neutrals. 

Since the United States owned few ships built to 
cross the Atlantic, the most promising candidates 
seemed the ships of other nations. These were, how- 
ever, out of the question with regard to direct exports 



STARTING COTTON MOVEMENT 121 

to Germany, because of the peculiar conditions sur- 
rounding hull and cargo insurance, without which no 
shipowner or shipper can let his property sail. This 
difficulty is connected with British control of the 
vessel insurance business for the whole world, a con- 
trol which was naturally exercised to injure the 
enemy of England. 

As for marine insurance, neutral vessels could 
without difficulty obtain it from the German and 
neutral marine insurance companies, including the 
American. But they could obtain no war risk insur- 
ance to cover them in the German trade. The large 
field of British private companies was closed to them. 
Neutral insurers, in so far as they participated in 
the war risk business, confined themselves to lesser 
risks than on shipments into Germany, in the face 
of the attitude England was exhibiting toward all 
such commerce. The War Risk Insurance Bureaus 
of other neutral governments than our own were 
restricting their insurance to their own vessels 
engaged in the home trade. They had no intention 
of insuring shipments between America and Ger- 
many. 

Our own Government War Risk Insurance Bureau, 
established in September, was unfortunately limited 
by law to insuring American cargoes in American 
vessels, under the pleasant delusion that there were 
enough American vessels to carry the cargoes across 
the sea. 

Other neutral vessels being eliminated from the 
American-German trade through this war risk insur- 



122 ECONOMIC ASPECTS OF THE WAR 

ance difficulty, only American vessels remained. 
With few exceptions, we had no oversea merchant 
carriers. Most vessels flying the American flag were 
constructed for the coastwise, Gulf, Caribbean and 
Great Lakes trades. They were not fit for long 
transoceanic voyages. The Government Bureau 
offered to take war risk insurance on these vessels, 
but required first that they get their marine insur- 
ance elsewhere. 

Since they were not built for crossing the ocean — 
which no one knew better than the insurance men — 
the small American steamers had a long fight to get 
this marine risk insured. It is not the custom for a 
single insurer to assume the whole risk of insuring a 
vessel. Such a risk is jointly carried by a number of 
insurance companies, or underwriters. So far as 
oversea insurance is concerned, the American com- 
panies have been mere participants with the big 
English companies in the business. The Americans 
were unable to secure English aid in furthering ship- 
ments to Germany ; they long seemed incapable of 
carrying those risks themselves. 

Finally, so Washington claims, the American 
underwriters were forced to do this insuring by the 
threat that, if they did not, a bill would be intro- 
duced in Congress empowering the Government War 
Risk Insurance Bureau to enter the marine insurance 
field. The prospect of perhaps permanent govern- 
ment competition was too much for the American 
marine companies. They shifted to British insurers 
some of the risks that they (the Americans) were 



STARTING COTTON MOVEMENT 123 

carrying on English and neutral business, and set 
free part of their own resources to enable them to 
handle German trade. The rates charged on 
steamers not built to cross the ocean were naturally- 
high. 

When the cotton exporter had the marine risk on 
his American vessel covered, he turned to the Gov- 
ernment War Risk Bureau and found it quite inade- 
quate for his needs. The government limited the 
risk on any one bottom to $500,000, hull and cargo 
included. Even under normal conditions this amount 
would cover only a very modest hull and cargo. As 
the demand for American tonnage had brought about 
a great rise in its value, the shipper found, after he 
had covered the value of his vessel in the Govern- 
ment War Risk Bureau, that the margin left for 
the cargo was insufficient. There were occasions 
when the vessel alone was valued at more than the 
government's limit. 

Eventually Washington instituted a more liberal 
policy and, in some cases, the insurance limit was 
increased to $1,000,000. But the time lost in get- 
ting this limit extended, after overcoming the other 
difficulties described, helped hold up direct shipments 
to Germany for many months. The first American 
ship in this trade was the Greenbriar, reaching 
Bremen on January 9, 1915. She was followed by 
others, mostly vessels withdrawn from the coastwise 
trade. The high marine risk charged on them was 
shown to be justified when one, the Denver of the 



124 ECONOMIC ASPECTS OF THE WAR 

Mallory Line, foundered on her return trip from 
Germany. 

All the cotton that has been shipped direct to 
Germany the past season has moved in these Ameri- 
can steamers. But the capacity of even the consider- 
able numbers of them withdrawn from the coastwise 
service was totally inadequate to the situation. This 
is illustrated by the smallness of our exports to Ger- 
many from August 1 to April 1 : 250,000 bales com- 
pared with 2,250,000 bales last year in the same 
period, a shortage of 2,000,000 bales. If cotton to 
Germany had moved only in direct shipments in 
American steamers, the movement would never have 
afforded the relief which it eventually did afford. 
There were simply too few American ships and those 
who knew the situation promised themselves no results 
of value from the elimination of insurance difficulties 
that forbade even these few ships to sail. 

The fundamental dearth of American vessels for 
this German cotton trade was early apparent to the 
government at Washington. The simple way to 
create such American tonnage was to buy it from 
foreigners and put it under the American flag. The 
obvious tonnage in the market was the German, tied 
up inactive in American ports. All other ships were 
on the seas earning such rates as never before; no 
one wanted to sell them. 

American laws already allowed the transfer of 
foreign-built vessels to the American flag, within 
five years of their construction. In August, 1914, 
a new law was passed removing the age maximum 



STARTING COTTON MOVEMENT 125 

and permitting ships so entering the American regis- 
try to retain their foreign officers. This last measure 
was designed to remove the last objection to such 
purchase, in the mind of the American buyer. 

Yet no one came forward to buy the German ships, 
or any others. Nobody felt quite sure of support in 
exercising his right to purchase belligerent mer- 
chant ships in war time and operate them under the 
American flag. Everyone could count on the active 
opposition of the British Government to such pur- 
chase, an opposition only too plainly indicated in 
the despatches from London. Under such circum- 
stances the American buyer of a German ship ran 
the risk of purchasing one which he could not use 
when purchased. 

Precisely this situation was created for the buyer 
of the former Hamburg- American liner Georgia. In 
March an American bought this steamer after 
obtaining, from a representative of Great Britain, 
what appeared to be an assurance that His Majesty's 
Government would make no opposition to the pur- 
chase and operation of the vessel, provided she did 
not run in the German trade. She was bought to 
run to the West Indies and South America. How- 
ever, with the vessel bought and the money paid, 
the British Government announced that it would 
seize the ship if she left port. The buyer had a ship 
he could not sail. 

The case of the Dacia is better known. In Decem- 
ber and January Senator Walsh, spokesman for the 
administration, proved to the satisfaction of the 



126 ECONOMIC ASPECTS OF THE WAR 

reading public that there was nothing in interna- 
tional law that prevented Americans from acquiring 
any belligerent merchant vessel they chose, provided 
the purchase were bona fide and the transfer abso- 
lute and unconditional. It was shown that Great 
Britain's own precedents would not permit her to 
oppose such transfer. There was considerable mis- 
cellaneous criticism of American citizens for neg- 
lecting to seize the golden opportunity to upbuild 
our merchant marine. An American, Edward N. 
Breitung, tried to seize it. 

Breitung purchased outright the Hamburg-Amer- 
ican steamer Dacia, which lay in Port Arthur, Texas. 
He hoisted on her the American flag, signed an 
American crew and American officers, and loaded her 
with Texas cotton at Galveston. She was to clear 
for Bremen. Evidence was submitted of the validity 
of the transfer, satisfactory to the State Department 
at Washington. 

Great Britain announced that it would capture 
the Dacia if she sailed. The State Department 
tried to induce the British Government to let the 
vessel make just this one trip to Rotterdam, Hol- 
land, the Dacia's original destination having been 
altered in order to improve her chances of getting 
across. His Majesty's Government, being by this 
time apparently immune against our communica- 
tions, could not see its way clear for such a conces- 
sion. 

Yet for England to have seized the Dacia, in the 
face of English precedents that justified just such 



STARTING COTTON MOVEMENT 127 

transfers, and while complications of other kinds 
were accumulating in the diplomatic relations of 
that country and America, would have been clearly 
impolitic. It happened that the allied French Gov- 
ernment was embarrassed by no such conditions, 
either as to precedents or diplomatic complications. 
In fact the French precedents did not recognize the 
validity of transfer of a belligerent's merchant ves- 
sel during war time.* So England allowed a French 
cruiser to capture the Dacia and tow her into Brest. 
There she was thrown into a French prize court. 

In view of the reluctance of private citizens to 
create American tonnage, the administration during 
the early months of the war determined to acquire 
the necessary ships with government funds and to 
arrange for their operation. Two reasons were be- 
hind this measure. One of these was a desire to relieve 
the distress of the cotton states and to start the move- 
ment of grain, which for a time was halted by lack 
of ships. One reason was the desire of the Demo- 
cratic administration to call into life an American 
merchant marine, about which the Republicans, with- 
out practical effect, had talked and agitated for so 
many years. 

But the main problem was to get cotton moving 
into Germany. Since private citizens had failed in 
their attempt to acquire ships and start this move- 
ment, the task seemed to many an appropriate one 

*However, the Declaration of London, under which England 
and France were both acting, recognized the validity of such 
a transfer as the Dacia. 



128 ECONOMIC ASPECTS OF THE WAR 

for the government itself.* There were men who 
supported the Ship Purchase Bill on this ground, 
believing that it would put the government in posses- 
sion of a large number of ships, and that these ves- 
sels would be at the service of the South for the 
export cotton trade. 

Had the administration been entirely frank with 
the public, the bill might, quite probably, have 
passed. In such case, government-owned ships with- 
out interruption would have carried cotton and food 
to Germany, bringing back dyes, potash, and other 
German imports. The British so-called "blockade" 
would never have been established against such a 
government line. 

The bill was projected in August and September 
of 1914. It provided for a corporation in which 
the American Government was to be the main stock- 
holder. The corporation was to have $40,000,000 
at its disposal, available for purchasing ships. It 
was claimed that the ships were needed to carry 
American products to market. What ships, what 
products, what market, were not specified. Yet 
everyone knew that the market that called for our 
product was Germany, that the product that chiefly 
required American ships to carry it was cotton, and 
that the ships available for purchase were the 
interned German steamers. 

For two main reasons England was opposed to 
the bill. In the first place, the purchase of German 

*See Minority Report of the Merchant Marine Committee 
of the U. S. Chamber of Commerce, Appendix, p. 322. 



STARTING COTTON MOVEMENT 129 

steamers would have created in this country credits 
available for purchases by Germany. More impor- 
tant than that, the British Government could not 
have continued to exercise against a line backed by 
the United States the "economic pressure" which 
they had been exerting, and which they proposed to 
exert, on Germany. 

The British opposition to government purchase 
of German interned vessels was manifested in the 
despatches from London and in unofficial warnings 
at Washington. Eloquent Republican senators de- 
nounced the Ship Purchase Bill as likely to involve 
us in a war with England, and in their speeches 
solemnly referred to the warnings from London. 
The administration itself was confused. 

Very possibly the country would have stood behind 
the administration if it had said : 

"The South is prostrate. Cotton is 20 cents in 
Bremen and 6 cents in Augusta. Germany is ready 
to take large quantities off the southern market and 
relieve the situation. It happens that we must have 
American ships to get that cotton through. We 
propose to buy them, and to buy them where we can 
get them cheapest and quickest, put them under the 
American flag and send them full of cotton to 
Germany." 

Unfortunately nothing of this sort was done. 
Intentions were veiled until no one knew what was 
intended. The word Germany was taboo, either as 
a market to be sought or as a source for ships. 
People in Washington spoke of buying English and 



130 ECONOMIC ASPECTS OF THE WAR 

neutral ships. It was specifically said that no ships 
would be bought that would involve us in any diffi- 
culty with the belligerents. Officials spoke generally 
of running the ships "wherever needed," particularly 
to South America, to develop our trade there. 

As to buying other than German vessels, how- 
ever, England and many neutral countries put 
embargoes on the sale of their merchant ships away 
from the home flag; so that proposition was a futile 
one. And South America, as was easily pointed out, 
was in no shape to have its trade with us developed. 
That continent found itself unable to sell to a large 
part of Europe, and hence was unable to buy from 
us or anyone else. Vessels in the regular lines to 
South America were sailing out of New York only 
half loaded. 

That is, the administration seemed to be asking 
for these ships from an impossible source, to insti- 
tute South American services which were unneces- 
sary and superfluous. If this was the real purpose 
of the Ship Purchase Bill, no money should have 
been voted for it. If it had some other purpose, that 
purpose ought to have been declared. Under our 
apparent concern for the displeasure of England, 
the bill had become a measure to buy ships nowhere 
in particular and run them everywhere in general. 
It was on this rock that the project foundered after 
a stormy contest in the Senate that carried through 
most of January and February. 

It has been seen that American ocean-going ships 
were necessary to carry cotton to Germany. Private 



STARTING COTTON MOVEMENT 131 

individuals failed to acquire such ships and the 
attempt to acquire them by public action failed. 
Long before this result had been worked out in the 
sensational Republican filibuster in the Senate, the 
real cotton shippers gave up hope of ever getting 
much cotton into Germany direct, and bent their 
efforts towards starting the movement to Germany 
via neutral ports, in neutral ships. 

England met this contingency by two means. 
One of these was to urge the neutral countries adja- 
cent to Germany to place re-export embargoes on 
cotton, such as they had placed on many other arti- 
cles, under virtual compulsion from England. The 
second means was the fear created in the minds of 
the shippers that cotton might be declared contra- 
band; and this fear interfered with its shipment to 
Germany via all neutral countries. 

Pressure designed to compel re-export embargoes 
was first exerted on neutral Holland. In the first 
days of the war the Netherlands Government placed 
a re-exportation embargo on cotton, and the ban 
was never removed until January 9, 1915. This 
meant that the natural way into Germany was 
barred : the route through Holland and up the Rhine. 
In times of peace much of West Germany is so 
supplied from the oversea world, since Rotterdam, 
at the mouth of the Rhine, is in Dutch hands. 

Another neutral country which maintained an 
embargo for a considerable period was Italy. The 
other "adjacent neutrals" at first refused. They 
contended for the right of their merchants to for- 



132 ECONOMIC ASPECTS OF THE WAR 

ward cotton to Germany, since cotton was on the 
"free list" of the Declaration of London, according 
to which England — barring certain modifications — 
professed to be acting. 

That England sought deliberately to prevent cot- 
ton from moving to Germany via the neutral coun- 
tries by fostering rumors that cotton was likely at 
any moment to be declared contraband, cannot be 
denied. The fear of such an event was such a potent 
influence in banking and insurance circles that it 
made cotton exports very difficult. No one knew 
that cotton might not be peremptorily declared con- 
traband, as copper had been, while cargoes were 
in mid-ocean. What the situation called for was 
clear. A definite declaration from England was 
needed, to the effect that cotton was not and would 
not be considered contraband of war. 

In the latter half of September and early October, 
attempts were made to have our government get 
such a declaration from England. If the State 
Department made an effort in this direction, the 
effort was not successful. Shippers who pressed for 
the declaration received at Washington the answer 
that it would be an affront to ask England to make 
such a statement. Was not cotton on the "free list" 
of the Declaration of London, and was not His 
Majesty's Government guiding itself by the prin- 
ciples of that Declaration, with certain exceptions 
that did not affect cotton? Therefore, ship cotton 
freely. 

To remove the last vestige of apprehension, Solici- 



STARTING COTTON MOVEMENT 133 

tor Cone Johnson, of the State Department, issued 
on October 10 the following statement of his per- 
sonal opinion as to the ease with which cotton could 
move to Germany: 

"There is no impedient to the shipment of cotton 
to any country, not excepting the belligerents. Cot- 
ton is non-contraband, for the manifest reason that 
in its raw state it cannot be used for the purposes 
of war. In order to be available for use by armies 
and navies, or forces of the belligerents, it has first 
to undergo a long process of manufacture. It is 
ranked as a non-contraband in the London Conven- 
tion. 

"Of course shipments of cotton to foreign coun- 
tries, if they are to escape detention, must be shipped 
in American or other vessels flying neutral flags. 
There is no legal impediment to a shipload of cotton 
going direct to Hamburg consigned to German 
spinners, and, personally, I hope to see the expor- 
tation of cotton to the countries at war increase. 
The English give preference, I understand, to Egyp- 
tian cotton, but other countries at war, no doubt, are 
in need of raw cotton. Apparently the American cot- 
ton interests should, if they have not already done 
so, seek out these markets." 

The solicitor's optimism did not infect the cotton 
trade or start the cotton movement. He was right 
in believing that England was preferring Egyptian 
cotton, and that there was a market for American 
cotton in belligerent countries other than England. 
He seemed to underestimate the subtle difficulties 
in reaching that market. The trade waited for 
assurance from someone more closely in touch than 



134 ECONOMIC ASPECTS OF THE WAR 

the solicitor with the practices and purposes of His 
Majesty's Government. 

That the absence of a definite British declara- 
tion that cotton was to be considered non-contra- 
band had prevented export shipments from moving 
even for neutral consumption, is made clear by a 
telegram of the president of the New York Chamber 
of Commerce to Mr. Bryan on October 24. It 
repeated the reports that the Allies had announced 
cotton for Germany and Austria as on their pro- 
hibited list and had warned vessels trading with 
Scandinavia, Holland and Italy against carrying 
cotton for Germany or Austria. 

Therefore, the telegram read, even shipments to 
neutral countries were in danger. They might be 
brought before a British prize court and have to 
establish their innocency; yet no one had been told 
what proofs of innocency would be satisfactory. 
Therefore, it went on, neither shippers nor insur- 
ance companies dared handle trade for neutral 
countries, to say nothing of Germany. The whole 
cotton trade was represented to be in a serious pre- 
dicament. The message then asked that Great Brit- 
ain be requested to give some authoritative state- 
ment of its attitude, both with regard to shipments 
destined to neutrals and shipments destined to 
Germany and Austria. 

Indeed there was need for relief. Through Sep- 
tember and October, cotton had been passing out 
of the producer's hands at a price of six cents per 
pound. Speaking broadly, the small southern 



STARTING COTTON MOVEMENT 135 

farmer has been for years in a state of near eco- 
nomic slavery. He lives on credit. When the cotton- 
planting season comes, the general store gives the 
farmer on credit the seeds, fertilizer and implements 
he needs. During the growing season it advances 
him clothing and food for his family. The under- 
standing is that the debt will be paid when the cotton 
is harvested. It is frequently paid by direct delivery 
of cotton to the store, where the farmer is credited 
at the current cotton price. 

So in September and October of 1914, when the 
current price was six cents, the farmer could not 
hold his product until better times came. He was 
in debt ; he was living on credit ; and unless he turned 
his cotton in, his credit would be cut off and he would 
be in positive want. The storekeeper had his bills 
and notes to meet also ; and he, too, generally had to 
sell the cotton at once for what it would bring. 

It cannot be denied that there are large farmers 
in the South who are financially independent and 
capable of holding back their product. Some did 
hold it back. But even of those who could carry 
the cotton, there was many a cautious spirit who did 
not care to take the risk of cotton going still lower 
than the six-cent level which it reached. These men 
sold at eight and seven or six and one-half cents 
when they saw cotton falling, and later congratu- 
lated themselves on having gotten off so well. 

Shippers were pressing the State Department to. 
give them the true remedy for the evil times in the 
South, — the remedy that worked when applied. In 



136 ECONOMIC ASPECTS OF THE WAR 

the meantime, the country was full of nostrums 
for the malady. There was talk of the government 
buying the entire cotton crop and holding it. There 
was formed a cotton pool loan fund, which bound 
northern banks to help out their southern confreres, 
but little of the fund was ever used. The President 
headed the "buy-a-bale" movement. The daughter 
of the Speaker of the House of Representatives 
planned a "national cotton goods bargain day." 

The final sacrifice of patriotic devotion was made 
by the august judges of the Mississippi Supreme 
Court, who, according to news despatches from Jack- 
son, of October 26, held court clad in overalls and 
cotton shirts, while the lawyers argued in the same 
garb. The function was reported to be part of a 
local "cotton day," in furtherance of the "wear 
cotton clothes movement" in the South. War, as 
General Sherman said, is indeed hell. 

While the learned judges were doing their best, 
those who had studied the export situation were 
applying other, and more effective, remedies. Dis- 
couraged at the failure of their efforts through the 
State Department, the southern senators finally 
turned to the British Government direct. On October 
22, Senator Hoke Smith, of Georgia, introduced in 
the Senate a resolution providing for the appoint- 
ment of a committee of five senators to look into the 
matter of facilitating shipments abroad. The reso- 
lution was passed and the President of the Senate 
appointed Senators Smith, of Georgia; Vardaman, 
of Mississippi; Smith, of South Carolina; Jones, of 



STARTING COTTON MOVEMENT 137 

Washington; and Smith, of Michigan. The next 
day this committee was in touch with the State 
Department and the British Ambassador. The 
committee seemed to galvanize the British Govern- 
ment into action. 

To have refused the southern senators would have 
meant legislation to enforce their demands (possibly 
an embargo on the exportation of something Eng- 
land wanted) ; for the South at that time still held 
the whip hand in Congress. No one knew this better 
than the British Government. And there were mur- 
murings also from the great textile centers in New 
England and the Atlantic states, for the manufac- 
turers had been told by Germany that if they desired 
the German dyestuffs vital to their industries it 
would be necessary to send cotton cargoes to pay 
for them. 

Under the pressure thus exerted the British au- 
thorities gave way. On October 26, the following 
letter was addressed by the British Embassy to Mr. 
Lansing, Acting Secretary of State: 

"The British Embassy, Washington, October 26, 
1914. 

"Dear Mr. Counsellor: In compliance with your 
request, I telegraphed on the twenty-third instant 
to my government to inquire what was their view 
with regard to cotton and whether or not they con- 
sidered it to be contraband. You addressed this 
question to me, as you said there seemed to be doubts 
in certain quarters in this country as to the attitude 
of my government. 



138 ECONOMIC ASPECTS OF THE WAR 

"Last night I received a reply from Sir Edward 
Grey, in which he authorizes me to give the assur- 
ance that cotton will not be seized. He points out 
that cotton has not been put in any of our lists of 
contraband, and, as your Department must be aware 
from the draft proclamation now in your possession, 
it is not proposed to include it in our new list of 
contraband. It is, therefore, as far as Great Britain 
is concerned, in the free list, and will remain there. 
I am, dear Mr. Counsellor, 

"Yours sincerely, 

"Cecil Spring-Rice." 



By this same declaration, the heavy restrictions 
on the export of cotton to neutral countries of 
Europe, as well as to Germany, were also removed. 
No one had felt safe shipping to .these countries so 
long as there was danger that England would de- 
clare cotton contraband. England had been detain- 
ing conditional contraband like meat and copper 
destined for neutral countries and neutral consump- 
tion on the pretext that the goods might be en 
route to Germany. No compensation was in sight 
for the cargoes detained and still unloaded. 

When the British declaration was once made, cer- 
tain officials in Washington were quick to. see its 
political value. Not one, but five or ten of them 
will each admit that he was the one responsible for 
getting the export cotton movement started. In 
the Senate, on December 21, Senator Walsh delivered 



STARTING COTTON MOVEMENT 139 

the most complete commentary on the glory for 
which they were competing. He said : 

"I have not dwelt on the just causes of complaint 
given to our shippers of foodstuffs and cotton to 
neutral ports. I know nothing of them in detail, but 
I do know that there never was a day when shipments 
of cotton from our shores to any port should have 
been interrupted, save for the want of vessels in 
which to carry it, and there is no achievement in any 
arrangement by which they have been finally per- 
mitted to move. No blockade has ever been declared, 
and yet it is notorious that such cotton as goes to 
Germany, goes with the permission of England." 



CHAPTER VIII 

Stopping the Cotton Movement 

After the British Embassy's letter of October 26 
to Mr. Lansing, England seemed under definite obli- 
gations not to interfere with our cotton exports to 
the Continent. But we were to learn that the hin- 
drances were by no means at an end. On October 30, 
four days after the note of Sir Cecil Spring-Rice to 
Mr. Lansing, Denmark for some reason declared an 
embargo on the exportation of cotton. This closed 
the route to Germany via Copenhagen which, after 
Rotterdam — a route already closed — was the most 
natural entrance into Germany through an adjacent 
neutral. 

Moreover, while England's position as to cotton 
was now on record, it was also important that assur- 
ance should be had from France. In general, that 
country joins England in such communications. In 
this case, however, by some unexplained circum- 
stance, Secretary Bryan was not able until December 
17 to announce that France also would not consider 
cotton contraband. 

When cotton for Germany direct finally started 
moving, not the least of the grievances of our cotton 
trade was the extraordinary rigidity of the British 
Government with respect to precautions against sus- 



STOPPING COTTON MOVEMENT 141 

pected concealment of contraband in cotton cargoes. 
It was a sufficient tax upon the patience and resources 
of cotton exporters that German-bound cargoes 
should be submitted to the examination of English 
consuls, the process in some cases including even the 
sealing of the vessel's hatches by these officials. Even 
this gave no assurance that the ships would not be de- 
tained and searched by British cruisers. The con- 
sular certificate and the British seal on the hatches of 
ships were considered as merely partial proof that 
cargoes contained only cotton. 

The further suggestion was made by England that 
it would be a valuable precaution against the possi- 
bility of detention and search if shippers would have 
the cotton bales photographed by X-ray process and 
the photographs sent along with the British consul's 
certificate as additional evidence that the cotton 
contained no contraband. The first of these photo- 
graphic seances took place December 25 at a pier 
in New York in behalf of the cargo of the City of 
Macon, an American coastwise steamer bound for 
Bremen. All this was of course at the cost of the 
shippers. 

But the most serious difficulty with a free cotton 
movement is to be found in still another episode of 
the period. On October 27, one day after the State 
Department had published the note of the British 
Ambassador, the British Admiralty alleged that the 
Germans had laid mines in the waters north of Ire- 
land. On October 29 the further news came from 
England that this measure on the part of Germany 



142 ECONOMIC ASPECTS OF THE WAR 

might cause England to close the North Sea to 
shipping. 

On November 2 the British Government declared 
the whole North Sea a military area, mined and 
dangerous for navigation. It was stated that mer- 
chant craft of all kinds would there be exposed to the 
gravest dangers excepting as they followed the 
specific sailing directions of the Admiralty. Though 
this announcement was not issued until November 2, 
the Admiralty disclaimed responsibility for acci- 
dents after November 5. All vessels trading to and 
from Scandinavian countries and Holland were in- 
structed to come, if inward bound, via the English 
Channel and the Straits of Dover, whence they would 
be directed up the east coast of England and thence 
to destination.* 

It will be noted that no directions are given for 
getting through to Germany. This mining of the 
North Sea had the effect of terrorizing the owners of 
American ships who were approached with regard 
to chartering of their vessels for cotton exports to 
Germany. It had a similar effect on the insurance 
men approached to insure such boats. As a result, 
the first American ship sailed for Bremen about the 
middle of December, though the British passport for 
cotton had been issued October 26. The requirement 

* Amsterdam despatches reported that, up to March 10, 
floating contact mines had been taken up and rendered harm- 
less along the Dutch coast to the number of 378. Of these, 
214 were of British origin, 22 German, 33 French, and 109 
unknown. 



STOPPING COTTON MOVEMENT 143 

that all vessels for Holland and Scandinavia should 
pass through the English Channel, simplified the 
British practice of seizing, examining and detaining 
this traffic. 

All this while, the British Cabinet was congratu- 
lating Great Britain on the success of the "economic 
pressure" applied to Germany. At a London ban- 
quet for the Lord Mayor on November 9, the Right 
Honorable Winston Churchill, First Lord of the 
Admiralty, declared that the economic pressure — 
Churchill invented the phrase — brought about by 
the naval blockade, would ultimately spell the doom 
of Germany as certainly as winter struck the leaves 
from the trees. On November 27 in parliament he 
announced: "The economic pressure on Germany 
continues to develop in a healthy and satisfactory 
manner." 

It is interesting to see his Lordship even as early 
as November 9 speaking of the "naval blockade" of 
Germany. Then, as now, the British authorities were 
exercising by indirection the rights of blockade 
without undertaking its responsibilities. 

Yet Great Britain has successively denied account- 
ability for any distress of the American cotton trade. 
In the British communication dated February 10, 
the second answer to our December 26 protest, is 
found the following : 

"Any decrease in American exports which is attrib- 
utable to the war is essentially due to cotton. 
Cotton is an article which cannot possibly have been 
affected by the exercise of our belligerent rights, for, 



144 ECONOMIC ASPECTS OF THE WAR 

as your Excellency is aware, it has not been declared 
by His Majesty's Government to be contraband of 
war, and the rules under which we are at present 
conducting our belligerent operations give us no 
power in the absence of a blockade to seize or inter- 
fere with it when on its way to a belligerent country 
in neutral ships. Consequently no cotton has been 
stopped." 

The point, of course, was that England's pressure 
upon cotton had been exercised so early in the course 
of its movement that for months it never got far 
enough to have a chance to be stopped by British 
cruisers. 

While the economic pressure upon Germany was 
the purpose of England's measures, British mer- 
chants were by no means averse to taking advantage 
of the depressed cotton prices brought about by the 
stagnant market in the South, and buying their 1915 
supply at famine rates. Of the heavy stock of cotton 
carried in the South during the cotton year 1914- 
1915, a considerable proportion was in the hands of 
persons who carried it for British importers and 
spinners. Some German buyers, as well, profited by 
the opportunity offered them, buying cotton to hold 
\ pending favorable conditions for shipment. 

Such circumstances as these elicited a fiery out- 
burst from Governor Colquitt of Texas. Great 
Britain had bought her cotton low after depressing 
the price, he said. The business of the South, he 
declared, was prostrated, its credit was impaired, 
and thousands of its people were starving. He pro- 



STOPPING COTTON MOVEMENT 145 

posed sending "American ironclads to England's 
door" to enforce our rights. 

Significant of the southern feeling was the adop- 
tion of the following resolution by the State Farmers' 
Union of Louisiana:* 

"Whereas the cotton farmers of the nation are 
suffering from the worst depression that has over- 
taken this country since 1860, and the business inter- 
ests are correspondingly affected in common with the 
farmer; and 

"Whereas/taking the European War as an excuse, 
England placed such restrictions on the exporting of 
cotton from the United States that it caused a ruin- 
ous decline in the price of cotton, owing to our in- 
ability to ship it to our customers in foreign coun- 
tries, and England did not relax her interference 
with the shipment of cotton until her subjects had 
practically bought a year's supply of cotton at about 
six cents per pound from our farmers, who were 
forced to sell in order to exist^f and 

"Whereas the waters of the seas are the only means 
of carrying the commodities interchanged between 
the various nations of this earth ; and 

"Whereas great injustice resulted from the efforts 
of some nations to interfere with the untrammeled 
and free use of the interchange of commodities of all 
kinds and interchange of -intelligence ; so be it 

"Resolved by the Louisiana State Farmers' Edu- 
cational and Co-operative Union of America, that 
we hereby pledge ourselves to do all in our power to 
obtain for ourselves and our fellow citizens and man- 
kind generally, the freedom and unhindered use of 

* Reprinted in Congressional Record, February 3, 1915, pp. 
3232-3233. 



146 ECONOMIC ASPECTS OF THE WAR 

the seas and of the air, and we hereby respectfully 
petition our Federal Government to give due notice 
to all nations, in view of the losses sustained by the 
people of these United States, that in future we 
henceforth shall ship all of our products at all times 
and to our customers in any nation just as in the 
past ; that this nation, being neutral, will not favor 
one over the other, but will treat all alike, as it ought 
to do, but that our government proposes to send its 
own ships, under its own flag, with the products of 
its own citizens, to its customers in any nation on 
earth, and will brook interference from no one in 
protecting the rights and the property and trade 
relations of its own people." 

We have seen that, in the face of all difficulties, 
cotton in good volume did get moving to Germany, 
via neutral countries, during November.* In a pre- 
vious analysis of the movement it was assumed that 
most of the exports to Italy, Holland and Scandi- 
navia in excess of their takings in 1913 may fairly 
be credited with German destination. In November 
1,000 bales cleared for Germany direct ; the indirect 
exports via neutral countries were approximately 
143,000 bales. In December 47,000 bales cleared for 
Germany by the direct route, and 263,000 bales by 
the indirect. In January 100,000 bales moved di- 
rectly, no less than 423,000 indirectly, to Germany. 
In February 89,000 bales were exported by the direct 
and some 458,000 by the indirect route. In March 
6,000 bales cleared for Germany, while the excess 
movement to neutral countries was 370,000 bales. 

* See table on p. 117. 



STOPPING COTTON MOVEMENT 147 

The effect of this movement was seen in advancing 
cotton prices. On November 16 the New York 
Cotton Exchange reopened, fifteen weeks from the 
date of closing. In the initial trading, spot cotton 
was quoted at 7.75 cents per pound. From then 
until Christmas the price varied between 7.35 and 
7.75 cents. On the day after Christmas the price 
was 7.60 and on January 4 passed 8 cents. During 
the second half of January it reached 8.50 cents. At 
that point it held until March 5, when a gradual rise 
began which carried the price up to 9 cents on 
March 20. 

The great British and German takings had braced 
the market. The relief was cumulative, and in spite 
of the British blockade action on March 1, the price 
advanced to 10 cents on April 9 and to a maximum 
of 10.60 on April 24. 

Yet from the day when Britain made an exception 
in favor of cotton and allowed us to ship it to Ger- 
many, there were English voices that protested 
against the exception. For some time no real excuse 
for interfering with the movement could be found. 
The first one offered came from Sir William Ramsay 
who, at the end of January, 1915, wrote the London 
Times advocating the placing of cotton on the abso- 
lute contraband list and pointing out that nitro- 
cotton is an ingredient of all modern powder. 

"If copper lies under an embargo, cotton a fortiori 
should be prohibited. To place it on the list of 



148 ECONOMIC ASPECTS OF THE WAR 

contraband of war is a necessity, unless the whole 
theory of contraband is given up."* 

If Sir William was following the successive British 
contraband lists he must have known that his govern- 
ment was by no means sacrificing the whole theory of 
contraband. But the inclusion of cotton in the list 
was not so simple as it looked. 

In the first place, great American interests were 
at stake. In view of these, the London Daily Mail 
advised against the Ramsay proposal, and declared 
that Germany already had enough cotton for mili- 
tary purposes. The Mail suggested that America 
might retaliate by putting an embargo on ammuni- 
tion exports to England. 

Moreover, the main uses of cotton are so far re- 
moved from the purposes of war that to declare it 
absolute contraband would be an affront to inter- 
national intelligence. It would be a particularly 
drastic violation of the Declaration of London, where 
the common sense of mankind had been expressed in 
putting cotton on the free list. And it was British 

* British scientists seem not to agree as to the importance 
of cotton in the making of explosives. On July 16 W. F. 
Reid, formerly president of the Society of Chemical Industry, 
addressed that society in London. Apparently referring to 
Ramsay, he said: 

"There is practically no cotton used in the manufacture of 
high explosives. The whole thing is a great fraud. There may 
be some trace of cotton in the explosive but the bulk of it is 
coal products. Eminent scientists have made erroneous state- 
ments on this subject. If people associated with science would 
speak only on the branches with which they are connected, the 
advantages would be very great." 



STOPPING COTTON MOVEMENT 149 

representatives who at the London Conference in- 
sisted upon including cotton in this list. 

Above all, the British Government as a neutral is 
on record as declaring that no belligerent can make 
cotton absolute contraband. Such action was 
attempted by Russia in the Russo-Japanese War. 
Upon instructions from Lord Lansdowne, the British 
Ambassador at St. Petersburg protested against this 
procedure. His letter to the Russian Minister of 
Foreign Affairs, resulting in forcing Russia to take 
cotton from the absolute contraband list, read: 

"British India is by far the largest exporter of 
raw cotton into Japan. The quantity of raw cotton 
that might be used for explosives would be infinitesi- 
mal in comparison with the bulk of the cotton ex- 
ported from India to Japan for peaceful purposes, 
and to treat harmless cargoes of this latter descrip- 
tion as unconditionally contraband would be to sub- 
ject a branch of innocent commerce to a most unwar- 
rantable interference." 

If cotton was to be banned it was imperative that 
some other way be found of dealing with this com- 
modity, and before long the desired opportunity 
arose. On February 4 the German Admiralty, in 
retaliation against England's alleged violations of 
the Declaration of London and all international law 
in general, declared the waters around Great Britain 
a War Zone where enemy merchant ships would be 
torpedoed and where neutral vessels and citizens 
would not be safe. The War Zone Decree was to be 
effective from February 18. 



150 ECONOMIC ASPECTS OF THE WAR 

Retaliation by England in the form of a complete 
stoppage of our exports to Germany was fore- 
shadowed in a cable from the British Government to 
the British Embassy in Washington, given out for 
publication on February 5, the day after the War 
Zone announcement. The cable read in part : 

"The apparent intention, however, of the German 
Government to sink merchant ships by submarines, 
without bringing them into port or providing ac- 
commodation for their crews, and regardless of loss 
of civilian lives, and the attempt to effect this even 
against a hospital ship, has raised very seriously the 
question whether Great Britain should adopt in 
retaliation more stringent measures against German 
trade. 

"It is recognized that when any such decision to 
this effect is reached, due care must be taken not to 
inflict loss upon neutral ships which have sailed 
before any warning has been given or the decision 
announced." 

This purpose was further indicated in the last 
paragraph of the note of February 10, addressed by 
Sir Edward Grey to the American Ambassador at 
London.* On the following day, February 11, 
Premier Asquith in the House of Commons made a 
statement thus reported in American press de- 
spatches : 

Premier Asquith, in an announcement made to the 
House of Commons this afternoon, said that the 

* The paragraph ends : "It is impossible for one belligerent 
to depart from the rules and precedents and for the other 
to be bound by them." 



STOPPING COTTON MOVEMENT 151 

British Government was about to take more stringent 
measures against the trade of Germany. 

Replying to a question put by Admiral Lord 
Charles Beresford "whether the government will place 
all food and raw material used in German industries 
on the list of absolute contraband,"' the Premier 
said: 

"The government is considering the question of 
taking measures against German trade in view of the 
violation by the enemy of the rules of war. I hope 
shortly to make an announcement of what those 
measures are to be." 

It is instructive to note the tentative form in which 
the blockade proposal still remained. To Lord Beres- 
ford's question whether Great Britain would place 
on the contraband list raw materials for German 
industries, the Premier would only state that the 
government was considering what measures should 
be taken. The measure it was considering could as 
well have been announced in parliament on February 
11 as on March 1, when the blockade was finally 
proclaimed. But one thing had to be assured: that 
American public opinion, which in October had re- 
volted against the interference with cotton, would not 
again revolt. The intimation of Mr. Asquith on 
February 11, cabled to this country, served to test 
whether that opinion was still active. 

On February 17 a test was again made. De- 
spatches from London stated that a proclamation 
was momentarily expected declaring "a blockade of 
the German coast, or, at any rate, the prohibition of 
foodstuffs destined for Germany." England still 



152 ECONOMIC ASPECTS OF THE WAR 

left the way clear for a strategic retirement should 
Washington speak. Washington was silent. 

The preliminaries having been completed, on 
March 1 the now famous March 11 Order in Council 
was announced by Mr. Asquith in parliament, though 
it was not formally published until March 15. The 
announcement produced the desired effect on insur- 
ance companies, carriers and shippers. The Order 
in Council was in practical operation on March 2. 
When finally promulgated it declared subject to cap- 
ture all movement of goods to or from Germany 
whether direct or via neutral countries. Such an 
Order could have but one meaning: that Great 
Britain proposed a blockade. 

Steamers at once refused to take any more cotton 
or other shipments of German destination or origin. 
Insurance was withdrawn on all such shipments, no 
matter over what route they moved. A large volume 
of cotton had been contracted for German delivery, 
but had not yet moved from this country. Its owners 
faced a severe situation. 

It is interesting to learn how for one month this 
hardship was modified. An American government 
official called to ask the Washington Ambassador of 
Great Britain to do him a personal favor. America, 
he said, not recognizing the Order in Council or the 
validity of the British blockade, obviously could not 
officially ask for a modification of that which we con- 
sidered non-existent. It is a palpable absurdity to 
modify what is not. However, could not His 
Majesty's Ambassador as a personal favor consent 



STOPPING COTTON MOVEMENT 153 

to some measure that would permit the cotton 
shippers, who before March 1 had sold cotton to 
Germany, to forward their cotton? 

The British Ambassador yielded and wrote a tele- 
gram. It was sent to London, resulting in the fol- 
lowing special cotton dispensation being granted by 
the British Embassy in Washington, in a communi- 
cation issued by it on March 8 : 

"Many inquiries have been received as to the treat- 
ment to be accorded to cotton shipped to Europe in 
view of the restrictive measures proposed to be taken 
by the Allied Governments. 

"As already announced, there is no question of 
confiscating cotton cargoes that may come within 
the scope of the Order in Council to be issued. The 
following arrangement has been come to in London 
as to cotton consigned to neutral ports only. 

"One— All cotton for which contracts of sale and 
freight engagements had already been made before 
March 2 to be allowed free (or bought at contract 
price if stopped), provided ships sail not later than 
March 31. 

"Two — Similar treatment to be accorded to all 
cotton insured before March 2, provided it is put on 
board not later than March 16. 

"Three — All shipments of cotton claiming above 
protection to be declared before sailing, and docu- 
ments produced to and certificates obtained from 
consular officers or other authority fixed by (Allied) 
Governments. Ships or cargoes consigned to enemy 
ports will not be allowed to proceed." 

That is, cotton contracted for Germany before 
March 1 might be shipped to neutral countries up to 



154 ECONOMIC ASPECTS OF THE WAR 

March 31, though not to Germany direct. The modi- 
fication of the original Order was a slight one; it 
merely prevented that Order from being retro- 
active. Moreover, the provision that vessels should 
be allowed to proceed or be bought at the contract 
price meant that England reserved the right to stop 
and requisition cargoes from America to neutrals in 
the future. 

One vessel with a cargo destined for Germany was 
allowed to go forward after March 31. The condi- 
tions under which the vessel sailed are an instance of 
what England described as sympathetic considera- 
tion of the cotton interests. Due to a lateness in 
arrival of the S. S. Kina at her berth in Savannah, 
it became impossible to load her before the end of 
March. Permission for time extension on this one 
ship was sought by the State Department from His 
Majesty's Government. His Majesty's Government, 
through the medium of the American Ambassador at 
London, accorded this favor to the State Depart- 
ment in a cable from Mr. Page, dated March 29, 
1915. It was firm, as well as kind, and read as 
follows : 

"I am informed by the Foreign Office on the 24th 
that the S. S. Keit (Kina), in view of the special 
circumstances of the case, will be permitted to go 
forward on her prearranged trip from Savannah to 
Rotterdam, Goteborg, and Copenhagen, provided, 
however, that her cargo of cotton is covered, with the 
exception of the date of sailing, by the terms of the 
agreement recently concluded concerning such ship- 
ments, and further provided that there shall be 



STOPPING COTTON MOVEMENT 155 

allowed no undue delay to occur in reloading this 
steamer on arrival at Savannah and in the departure 
of the steamer from Savannah. 

"Sir Edward Grey most earnestly requests that it 
be distinctly understood that this indulgence must 
not be used as a precedent for further exceptions 
from the provisions of the agreement above referred 
to." 

The request was distinctly understood, and no fur- 
ther indulgence was asked. The British allowed the 
Kina' to go forward. They did not allow her to reach 
her destination. She was stopped and thrown into a 
British prize court. 

Indeed, it became evident not only that His 
Majesty's Government, as announced in the Order 
of March 11, would allow no cargoes to go directly 
to German ports, but also that even the German 
cotton for which indirect shipment was nominally 
permitted was by no means to be allowed to reach 
its destination. To be sure there was nothing in 
international law or the English law to justify 
the stoppage of these neutral cargoes — they were 
mainly cargoes consigned to forwarders in neutral 
countries. Yet the contingency was met by the 
British diplomats. On March 31, as we have seen, 
during trial of the Wilhelmina case, the British 
crown lawyers, to the astonishment of this country, 
produced a new Order in Council empowering His 
Majesty's Government to requisition the cargo of 
any neutral vessel in a British port. 

The rest was easy. Since a British cruiser could 
bring into a British port any neutral merchant 



156 ECONOMIC ASPECTS OF THE WAR 

vessel on the high seas, this Order meant that no 
vessel carrying goods to neutral European countries, 
whether cotton or anything else, was exempt from 
the unloading and impressment of its cargo by 
England. In order to make sure that no cotton 
would reach Germany many cargoes destined for 
neutral consumption were bought by England. For 
cargoes thus unlawfully seized the compensation 
promised by His Majesty's Government was by no 
means sufficient. The interference with established 
trade, the breaking up of commercial relationships, 
were matters of more serious import than the values 
of the shipments directly involved. If you in Scan- 
dinavia buy a cargo of cotton and never receive it, 
I may be relieved by Great Britain from loss on this 
particular shipment. But I get no more orders from 
you. You will not order what cannot be delivered. 
One of the country's large cotton exporters wrote on 
May 17 : 

"The exporter of cotton today can sell at a good 
price cotton to Sweden, Norway, Holland and 
Switzerland for immediate delivery or for next fall's 
shipment, but he is prevented from so doing by the 
fact that under the British Orders in Council every 
bale is subject to detention and seizure though 
shipped in neutral, even American ships. It is obvi- 
ous that the spinner in Sweden or the dealer in Nor- 
way cannot afford to buy and pay cash for cotton 
when the chances are that there will be delivered to 
him not the cotton itself, but a claim against some 
government for detention and seizure of his goods." 



STOPPING COTTON MOVEMENT 157 

It is, of course, far from a handicap to the British 
manufacturer of cotton goods, when competitors in 
Scandinavia find their supplies of raw cotton scarce 
and high in price. The British market is kept 
flooded with diversions of neutral-bound cargoes. 
On August 5, 1915, despatches from Washington 
quoted the Department of Commerce as stating that 
British exports of cotton goods and cotton yarns to 
Scandinavia and Holland in the first six months of 
1915 showed a great increase over 1914. At the 
same time that our exporters are hindered in their 
exports to European neutrals, British raw cotton 
dealers expand their re-exportation of cotton im- 
ported from us. In June, 1915, Holland and Sweden 
each took from England five times as much' raw 
cotton as in June, 1914. 

In March and April, 26 cargoes of cotton destined 
for neutral European ports were held up in England. 
The "unofficial" Foreign Trade Advisers of the State 
Department were conferring with the British Em- 
bassy in Washington in an attempt to get these ship- 
ments released or paid for. On May 20 the pressure 
was so great that the British Foreign Office included 
a reference to cotton in the press statement which it 
gave out, primarily regarding the detained meat 
cargoes.* It was stated that the cotton would be 
purchased in accordance with the "agreement" 
reached with American cotton interests regarding 
cotton shipped in March. It was averred that this 
arrangement was highly satisfactory to the cotton 

* The statement is abstracted in Chapter VI. 



158 ECONOMIC ASPECTS OF THE WAR 

interests and that "His Majesty's Government were 
given to understand that the provisions of the 
arrangement were acceptable to the United States 
Government." 

The cotton interests had no means of bringing to 
Britain knowledge of how little satisfactory to them 
was an arrangement which limited to one month the 
continuance of their trade with neutral countries and 
Germany. Our government, to indicate that Eng- 
land was under a misapprehension in supposing that 
it approved of any arrangement supporting the 
Order in Council, ordered its Foreign Trade Advisers 
to withdraw from conferences with the British Em- 
bassy until England clearly understood the matter. 
Three days later the British Ambassador issued an 
official statement saying that the unofficial arrange- 
ments in question of course did not in any way involve 
a departure by either government from its expressed 
views regarding the blockade. 

Not until June had Britain begun making pay- 
ments on the cotton. On July 19 Sir Robert Cecil 
announced in parliament that $3,500,000 had been 
paid on the seized cargoes, which by this time were 
sixty in number. 

The procedure through which our shippers had to 
go, in order to get any return for their detained 
shipments, was one of unexampled complexity. When 
the ship sailed from this country duplicate copies of 
papers, such as shipping documents and contracts, 
were to be given to British consular officials in our 
ports. The papers were forwarded to London and 



STOPPING COTTON MOVEMENT 159 

arrived in England at about the same time as the 
cargo which was detained for examination. The 
papers were referred to the British Admiralty, thence 
to the Foreign Office and finally to the Board of 
Trade. The Board of Trade took two weeks to 
examine the contracts. The papers were then sent 
to the Admiralty and by it to the Foreign Office, 
which had to deal with the shipper. 

In the meantime six weeks were consumed. The 
shipper felt by this time that he ought to have his 
cargo freed or paid for. The "arrangement" by 
which the Admiralty detained cargoes provided that 
they should be purchased "at contract price" or 
released. If the shipments were contracted for when 
they left this country, the price appeared in the con- 
tract. If they were sent to a broker — for example, 
in Gothenburg — to be sold, the fair price was obvi- 
ously the market price at Gothenburg on the date 
when the cotton would have arrived, had it not been 
detained by England. But when the American owner 
attempted to get payment on either of these bases, 
the British Foreign Office was willing to do no more 
than make a payment "on account" (maximum ten 
cents per pound), insisting that the eventual price 
should be arbitrated. 

On July 20 the Board of Trade announced a rul- 
ing that detained cotton cargoes whose ownership 
had passed to Germans would be confiscated without 
payment. 

One of the most novel forms of "pressure" which 
Great Britain has exercised has been applied to 



160 ECONOMIC ASPECTS OF THE WAR 

cotton dealers in this country. Many of the most 
prominent are associate members of the Liverpool 
Cotton Exchange. The Liverpool Exchange has 
sent these American dealers, to be signed, an agree- 
ment not to deal directly or indirectly with enemies 
of His Britannic Majesty. Those who so sign will 
have their names posted in the Liverpool Exchange 
and receive preference by the Liverpool members. 
By implication, those who do not sign will be black- 
listed by those who handle the great cotton trade of 
England.* 

These then were the measures which England took 
to stop the movement of American cotton to Ger- 
many. The "blockade" made contraband of every- 
thing. In the spring of 1915 this was explained by 
His Majesty's Attorney General to a group of Brit- 
ish scientists, who, better versed in natural science 
than international law, followed the lead of Sir 
William Ramsay and, even after March 1, demanded 
that cotton should be made contraband. The Attor- 
ney General explained that the blockade prevented 
everything from going to Germany by sea and hence 
it would be superfluous to name cotton as an especial 
object of embargo. The Order in Council, he said, 
was very effective in preventing cotton from reach- 
ing England's enemies. Moreover, he continued, to 
declare cotton contraband would be to set a prece- 
dent which might return to plague Great Britain in 
the future. 

* For the text of the agreement, see Appendix, p. 322. 



STOPPING COTTON MOVEMENT 161 

The effectiveness of the British policy in prevent- 
ing the Germans from buying and getting our cdtton 
is measured by the fall in cotton prices in the Ameri- 
can market. 

We have seen that the cotton market reached its 
high level at the end of April. Though shipments 
toward Germany had been cut off on March 31, the 
effect of the great British and German imports 
carried through. But early in May the trend of 
prices began to reflect the apprehension of the mar- 
ket as to the future, an apprehension that was justi- 
fied as the months went by. 

The German takings were over. What might have 
been exported to that country lay a dead weight on 
the market. Spot cotton in New York, which was 
10.60 cents per pound on April 24, dropped to 10.05 
cents on May 6. Through May and June it aver- 
aged 9.50 to 9.75 cents. By the middle of July the 
July option had sunk to 8.25 cents. The prospects 
for a successful marketing of the 1915 crop had 
indeed become bad. 

What is the military value to England of all this 
economic pressure that she is exercising in the South? 
Will the German ammunition makers in the fall of 
1915 be embarrassed for cotton? It is used mainly 
in the form of gun cotton to make charges for the 
artillery and torpedoes. Certainly no reports from 
the front indicate that the German heavy artillery is 
sinking into a state of inactivity and there seems to 
be no excessive economy of torpedoes. That any 
such result will occur can be asserted or expected only 



162 ECONOMIC ASPECTS OF THE WAR 

by those who shut their eyes to the plain facts of the 
case. 

At the opening of the cotton shipping season, 
August 1, 1914, the stock of cotton in Bremen (to 
say nothing of the stock in German spinners' hands) 
was 309,000 bales, a quantity in excess of other 
recent years. The direct imports of American cotton 
into Germany from August 1, 1914, to April 1, 1915, 
were 242,661 bales. Adjacent neutral countries in 
the same period imported 1,668,846 bales more than 
in the same months last year. Assuming that all 
these excess imports of adjacent neutrals were 
destined for Germany, the total stock which that 
country had up to April 1, 1915, amounted to 
2,220,507 bales. 

It is likely that part of the excess exports to adj a- 
cent neutrals were for the consumption of these 
countries themselves. In particular, it is possible 
that Italy needed considerably more cotton than last 
year to supply her own textile mills, which appro- 
priated some of the foreign trade in cotton goods 
with countries that Germany had difficulty in reach- 
ing, such as Mediterranean lands and South America. 

Assume, therefore, that Germany to April 1 had 
2,000,000 bales of American cotton to meet her re- 
quirements. This is only 800,000 bales short of 
our exports to both Austria and Germany in the year 
ending August 1, 1914. Moreover, what of the 
150,000 bales annually raised in Turkey? What of 
the 100,000 bales of Persia; and the 1,000,000 of 
Russian Turkestan? Is there any doubt that the 



STOPPING COTTON MOVEMENT 163 

Jewish dealers who handle this Russian trade smug- 
gled a part of it into Germany, to get the high prices 
which Germany, alone of all buyers, was offering 
during the winter ? Why in May did England forbid 
the export of Egyptian cotton to Italy, if it was 
not moving through to Germany?* 

No one can imagine that the military will not be 
able to meet its needs from the vast store at hand, 
not only its needs for this year but also for a long 
time to come. Besides, so Hudson Maxim says, 
there are substitutes for raw cotton in making the 
explosive gun cotton. One, he informs us, is cellulose. 

Great Britain is aware of all this. She knows that 
in the case of cotton, as in the case of grain, the mili- 
tary is fully supplied. The pressure will fall upon 
the civil users of these products, if it falls at all. 
The hope is that the pressure on these civil users will 
become unbearable and that they will force the mili- 
tary to sue for peace. 

What is the prospect of a cotton famine in the 
German textile industries? For certain reasons, 
Germany needs less cotton than formerly. She has 
a large export trade in cotton goods. In 1912 this 
trade amounted to $31,055,000. Since the Orders 

* In a letter written to the London Times in April, James 
G. Peel of Manchester, a large cotton dealer, shows that the 
exports of Egyptian cotton to Germany and Austria dropped 
from 99,000 bales in the months October-March of 1913-1914, 
to nothing in those months of 1914-1915. But the exports of 
Egyptian cotton to Italy and Switzerland, neighbors of Austria 
and Germany, increased exactly 99,000 bales to the period 
under question. 



164 ECONOMIC ASPECTS OF THE WAR 

in Council of March 11 placed a ban on all German 
exports, even if shipped from neutral ports, the only 
countries Germany can reach are those accessible by 
land or via the Baltic, which England does not con- 
trol. Other oversea shipments have ceased. The 
only foreign markets still available are Turkey, Rou- 
mania, Bulgaria, Austro-Hungary, Switzerland, 
Holland and Scandinavia. In 1913 the shipments 
to these countries from Germany were about $4,000,- 
000,* or only 13 per cent of her exports of cottons. 
Therefore less raw material than normal is needed 
to work up for the export trade. 

Yet there is reason to believe that more cotton 
could have been used by German textile industries 
than was sent them from the 1914 crop. It is re- 
called that up to April 1 we sent to Germany about 
250,000 bales; and to adjacent neutrals 1,650,000 
bales more than last year. Assuming that 250,000 
bales of our excess exports to adjacent neutrals were 
actually destined for these neutrals, it appears that 
up to April 1 we sent Germany, directly and in- 
directly, about 1,650,000 bales. With regard to 
German consumption, other estimates agree pretty 
nearly with those of Ambassador Gerard, who in 
December wired the State Department that in the 
year 1914-1915 Germany could take about 2,000,000 
bales, Austria about 800,000, together 2,800,000. 
If that is the case, 1,150,000 bales more of the 1914 
crop could have been sold to the Teutonic Allies. 

* This does not include exports to Bulgaria, Austro-Hungary 
and Denmark, for which figures were not available. 



STOPPING COTTON MOVEMENT 165 

If this cotton had been allowed to move, it would 
have probably kept the price since May 1 at or 
near 11 cents. At 11 cents per pound, 1,150,000 
bales would have meant sales of $63,000,000 of cotton 
to Germany, to say nothing of the better prices that 
holders of cotton would have received for sales to 
American mills. Above all, the large quantity of the 
1914 output which we are carrying into the 1915 
crop year (beginning August 1) would have been 
considerably reduced. All this indicates the sacrifice 
which the South is demanded to make to a blockade 
which, the American Government says, England does 
not lawfully maintain. 

With the great German- Austrian market closed by 
a blockade, the prospects for this 1915 season are not 
bright. The yield will be a good one. Early reports 
of a larger acreage reduction have not proved true. 
There has been some reduction in the use of fertilizer, 
especially of the potash elements, but this reduction 
will not greatly affect the crop, the first year it 
occurs. 

It is simple to illustrate why no large acreage re- 
duction is not made. As a southern planter I may 
know it to be in the general interests of the South, 
and of high prices in general, that the cotton acreage 
should be reduced. But I want the higher prices to 
apply to as much cotton as I can raise. Therefore I 
will let the other fellow carry out the reduction in 
acreage. No considerable voluntary curtailment of 
independent agricultural producers has ever yet come 



166 ECONOMIC ASPECTS OF THE WAR 

to pass. We look for a good crop ; namely, at least 
12,000,000 bales. 

Much of the 1914 crop will be carried over. In 
April Mr. Harding, a member of the Federal Reserve 
Board, speaking before the Baltimore Chapter of the 
American Institute of Banking, estimated this carry- 
over at 5,000,000 bales, due to the fact that by 
April foreign and domestic spinners had already laid 
in supplies with an eye to the future, in excess of 
their current requirements. More recent estimates 
place the surplus at 4,000,000 bales. In any case it 
will be very large. The visible supply of cotton in 
the world at the end of July, 1915, was 2,500,000 
bales higher than last year. The quantity of the 
1914 American crop still in the hands of producers 
was 1,000,000 bales more than usual. 

There is a simple solution to the crisis that con- 
fronts the South. Another autumn like the last will 
ruin it. The present and prospective elimination of 
the German-Austrian market through an unlawful 
blockade is the largest single element depressing 
prices and threatening the future. Nothing would 
clear the situation like the lifting of that blockade. 
If it is not lifted, and if cotton prices are not to sink 
to low levels, either the cotton raisers must have 
advanced to them money with which to hold millions 
of bales of cotton until something happens — perhaps 
peace — to restore the normal purchasing power of 
the world, or someone else will have to carry enough 
cotton to relieve the weight on the market. 

The problems here involved go far beyond the 



STOPPING COTTON MOVEMENT 167 

limits of this book. The financial aid necessary will 
be in the nature of a valorization of the cotton crop. 
Banks which are asked to participate in the proceed- 
ing point out that the South is not built to hold the 
export cotton crop. It has not the warehouses. The 
export quota moves abroad and is held there. Be- 
sides this physical difficulty, the financial risk of 
carrying cotton for the indefinite period that this 
war may last is very great. 

In the middle of July, 1915, a renewed agitation 
arose in England for making cotton contraband. 
The British Government announced its definite inten- 
tion of confining European neutrals to the quotas of 
cotton which they had imported in normal years. The 
London Times suggested that Britain spend $175,- 
000,000 to buy up the amount of American cotton 
usually sold to the Central Empires and European 
neutrals and then declare it contraband. The cotton 
so bought was to be held off the market until the 
close of the war. It was the most magnificent bribe 
ever proposed. His Majesty's Government has not 
adopted the suggestion. 

From the British Embassy at Washington, near 
the end of July, seemed to emanate a suggestion that 
a cotton pool be formed, under the auspices of Eng- 
land and America, to distribute among the cotton 
interests such shipments as England would allow to 
go forward to neutral countries. It was said that 
England would abolish her policy of detaining cotton 
moving to neutrals if America would agree to ship 
neutrals no more than their normal takings. 



168 ECONOMIC ASPECTS OF THE WAR 

All these false remedies for the disease remind us 
of those proposed in the fall of 1914. Now, as then, 
the true remedy is the recovery of the closed German- 
Austrian market. Now, as then, we need to think 
straight, to ask with the power at our command and 
to break a blockade which we declare is illegal and 
which threatens with ruin an entire section of the 
country. 



CHAPTER IX 

Copper as Lawful Commerce 

Cotton, as has been seen, is our most important 
article of export. It is also the one which has suf- 
fered chiefly through belligerent activities on the 
sea. By a coincidence our second largest item of ex- 
port, copper, is the one to which the second largest 
measure of interference was allotted. 

While the actual monetary loss which befell copper 
interests (and they suffered heavy losses in the first 
six months of the war) was not so great as in the 
case of cotton, such losses as did occur were traceable 
to violations of international law and the rights of 
neutral trade, of a character especially flagrant. 

Copper, like cotton and petroleum, is a resource 
conferred upon this country more richly than on any 
other. In its raw state it is found principally in 
Michigan, Montana, Arizona and Utah. Of the 
normal production of 140,000,000 pounds per month 
at the refineries, mainly at the Atlantic seaboard, 
about 110,000,000 pounds come from domestic and 
30,000,000 pounds from imported ores. 

America turns out over half of all the copper pro- 
duced in the world but consumes only a third of the 
world's output. Over half our product has been ex- 
ported in recent years. This means that of the grow- 



170 ECONOMIC ASPECTS OF THE WAR 

ing number of our citizens employed in copper mining 
and smelting, about 70,000 in all, over half are nor- 
mally working to supply foreign markets. 

The principal foreign taker of our copper is 
Germany. This is due to the development of the 
German industry in manufactured copper, ranking 
second only to our own. Normally, exports to Ger- 
many move both directly and via Rotterdam. 
The copper consumption of the Netherlands itself is 
not large. Practically all of the heavy Dutch tak- 
ings, usually nearly equal to the direct shipments to 
Germany, may be considered as destined for Ger- 
many. 

Our shipments to Germany and Holland — that is, 
our exports to Germany — have amounted in recent 
years to one-half our entire exports of copper, or 
one-quarter of our entire production. There were 
indeed great interests affected by the British meas- 
ures which for three months hindered the movement 
of copper to Germany while it was a free good of 
commerce or as conditional contraband, and eventu- 
ally made it absolute contraband, subject to the same 
summary treatment as guns or shrapnel. 

Immediately after the outbreak of war the copper 
producers, excepting in the Lake Superior region, 
reduced their output to 50 per cent of normal. No 
one knew what was to be the effect of the war upon 
our exports. Of the current output, just before the 
war began, two-thirds had been going abroad and 
only one- third absorbed by the slack home con- 
sumption. 



COPPER AS LAWFUL COMMERCE 171 

On August 1, 1914, the refineries had on hand a 
stock of 100,000,000 pounds. Copper before the out- 
break of the war was selling for thirteen cents per 
pound, which for the majority of mines allows a very 
small margin of profit. The price started to decline 
immediately, in August. With copper below thirteen 
cents, the cheapest place to store what cannot be 
sold is in the ground. 

The reduction to 50 per cent of normal output, 
designed as an emergency measure, was destined, 
through the force of events, to carry beyond the New 
Year. 

Copper exports to Germany being so important 
to the copper industries, we had from the beginning 
a vital interest in the manner in which copper ship- 
ments were treated by England, the belligerent 
power which controlled the seas. Upon that treat- 
ment depended the possibility of continuing the 
German trade. As in the case of cotton, copper 
during the first week of August could be shipped 
nowhere, for financial reasons and lack of marine 
tonnage. Because of the unsettlement of the foreign 
exchanges as a means of making international pay- 
ments, shippers would export their copper only on 
the terms of "cash against shipper's documents in 
New York." This method of payment was such an 
innovation that it was some time before foreign 
buyers could make the necessary arrangements with 
the New York banks. 

With this difficulty overcome, as it was in a short 
time, shipments of copper should have gone forward 



172 ECONOMIC ASPECTS OF THE WAR 

to all nations of Europe with the same freedom as to 
England. Nothing in the international law code by 
which England was acting, namely, her modified 
Declaration of London, permitted the preventing of 
copper shipments to Germany. 

In August, 1914, England took twice as much of 
copper as in August of the previous year — 24,600,- 
000 pounds, against 12,100,000 pounds. In August, 
1913, the shipments to Austria, Germany and 
Holland — the total German takings — were 44,300,- 
000 pounds. In August, 1914, not a pound of 
copper moved to Germany or Austria ; and only 
5,350,000 pounds to Holland, compared with 14,- 
200,000 pounds in August of the year before. 

To appreciate the situation fully, it is necessary 
to consider the status of copper as defined by the 
Declaration of London. We recall that in an Order 
in Council of August 20, England announced the 
Declaration of London as her code of naval warfare, 
making certain important modifications. Therefore, 
it is to this Declaration that we must look to find 
the treatment that copper might reasonably have 
expected from the British authorities. Since copper 
was not named as either contraband or conditional 
contraband in the British contraband list of August 
4, accompanying the August 20 Order, it technically 
remained a free article of commerce, transportable 
direct to Germany undisturbed, in all but German 
ships. Still less could there be interference with 
shipments to Germany via adjacent neutrals. 

At the outbreak of war direct shipments of copper 



COPPER AS LAWFUL COMMERCE 173 

to Germany were impossible, since, as is recalled from 
Chapter VII, no vessels reached Germany from the 
United States until 1915. However, copper should 
have moved to Germany indirectly through Italy, 
Holland and Scandinavia. 

In August the British agents in this country 
could report that no copper was going to Germany 
directly and apparently none by the indirect route. 
There were no exports declared for Germany, while 
the copper shipped to the adjacent neutrals was only 
7,200,000 pounds compared with 29,200,000 pounds 
in August, 1913. The neutrals were getting only 
one-quarter of their normal takings ; they were 
obviously not receiving a surplus which could be sent 
forward into Germany. 

In September, however, the situation changed. 
Our copper exports to Holland and Italy reached 
normal, while those to Scandinavia jumped to six 
times their volume in September, 1913.* That the 

*Copfer Exports to Ettbopean Countries Adjacent to Germany 
Comparison of September 1913 and 1914 



1918 Sept. 1914 Increase, 1914 

Country Lbs. Lbs. Lbs. 

Holland 12,175,048 12,21 1,509 36,461 

Italy 3,127,053 3,352,606 225,553 

"Other Europe" 1,209,132 7,443,688 6,234,556 



16,511,233 23,007,803 6,496,570 

It is fair to assume that the increase of shipments to "Other 
Europe" was for the Scandinavian countries. "Other Europe" 
means Europe exclusive of England, France, Germany, Austria, 
Belgium, Holland, Italy and Russia. 



174 ECONOMIC ASPECTS OF THE WAR 

excess was all destined for Germany was by no means 
a necessary inference, as will be shown. But Ger- 
man destination was a possible construction to be 
put upon those excess shipments. 

American copper interests regarded this develop- 
ment with satisfaction. They seemed likely to regain 
their market on the Continent, just as they had 
already more than regained the English market, 
closed in the first few days of the war. 

But the British Government looked at the situa- 
tion with anything but pleasure. England, of 
course, did not wait until the tardy American gov- 
ernment statistics were published, to get news of the 
destination of our copper exports. These facts were 
ascertained by British agents from the ships' mani- 
fests, filed at the American Custom House, and were 
promptly cabled home. 

Though in the September statistics given, the 
increase in copper exports was greatest in the case 
of "Other Europe" (Scandinavia), yet the largest 
amount actually moving into Germany was prob- 
ably via Holland. Therefore the British Government 
set out to make Holland an example which should be 
heeded by other adjacent neutrals. 

The September measures of England were con- 
fined to Holland alone. These measures were four in 
number. 

(1) Dutch dealers were induced to sell to the 
British Government the stocks of copper in Dutch 
warehouses, about 2,400 tons. 

(2) Holland was induced to enact an embargo 



COPPER AS LAWFUL COMMERCE 175 

forbidding the re-exportation of copper that entered 
her borders. 

(3) The Holland- American Line, which has the 
only important regular line steamers that operate 
between America and Holland, was induced to refuse 
copper shipments consigned to individuals in Hol- 
land. It was required that such shipments be con- 
signed to the Dutch Government. 

(4) As an extra precaution, England made sure 
that the Holland-American Line knew what was 
meant. 

On September 21, while 1,500 tons of copper were 
afloat for Holland on the steamship Rotterdam and 
389 tons on the steamship Sloterdyk, the British 
Government made copper conditional contraband. 
At the time, this looked like a comparatively harm- 
less proceeding. Neutrals had not yet learned what 
it meant for a commodity to be on the British condi- 
tional contraband list. On the same September 21 
the Westerdyk sailed for Holland with 605 tons of 
copper in her cargo, and on the day following the 
Potsdam went out with 1,805 tons. These were all 
Holland-American steamers. 

When these vessels reached the English Channel, 
Great Britain halted every one of them, took them 
into British ports, and detained them each several 
days while their copper was being discharged. This 
was no trifling matter to the vessels' owners. Great 
steamships make money only when in operation. One 
day's detention for a vessel like the Potsdam or the 
Rotterdam means a loss of $2,000. These September 



176 ECONOMIC ASPECTS OF THE WAR 

and October seizures of the Holland- American boats 
were sufficient. The company learned its lesson, and 
never needed to be taught again. 

From these four ships England took a total of 
9,500,000 pounds of copper. 

These seizures could be justified by no known rule 
of international law. So long as copper was a free 
article of commerce, of course there was no excuse 
for interfering with it on its course to Germany, even 
directly. Even after copper had been declared con- 
ditional contraband, there was as little excuse for 
seizing it when destined to Germany via Rotterdam. 
The Declaration of London, Article 35, provided that 

"Conditional contraband is not liable to capture, 
except when foun'd on board a vessel bound for terri- 
tory belonging to or occupied by the enemy, or for 
the armed forces of the enemy, and when it is not to 
be discharged in an intervening port." 

That is, when conditional contraband for the enemy 
is to be discharged in an intervening port, such as 
Rotterdam, it is not subject to interference. Nor is 
there any precedent in international law — for ex- 
ample, in cases where treatment of conditional con- 
traband has come before the courts — to justify the 
stoppage of such traffic to a belligerent via neutral 
ports. 

In defense of the stringent British policy of inter- 
fering with supplies for Germany via adjacent 
neutrals Great Britain's second note (of February 
10) in answer to our protest of December 26, dwelt 



COPPER AS LAWFUL COMMERCE 177 

upon the principle of "continuous voyage" as applied 
to shipments into the Confederacy during the Civil 
War, in our so-called Bermuda cases. 

During that war it was found that the Confeder- 
acy was drawing large quantities of supplies from 
the island of Nassau, in Bermuda. It appeared that 
British vessels were carrying these supplies to Ber- 
muda, where the cargoes were transhipped. From 
Bermuda small blockade runners waited their chance 
to slip through the cordon of Federal warships 
before the southern ports. Warships of the United 
States then intercepted British vessels bound to 
Nassau and brought them before our prize courts, 
where all their Confederate supplies were condemned, 
on the ground that the ultimate and not the imme- 
diate destination was the controlling factor. That is, 
to those Confederate goods was applied the doctrine 
of "continuous voyage," previously developed in 
British courts. 

But it is to be noted that these cases referred not 
primarily to the application of contraband law with 
the seas open, but to a condition of blockade and 
attempted violations thereof. And in September and 
October of 1914 there was no British blockade of 
Germany, even on paper.* Nor were the captured 

* Even today when a so-called "blockade" is maintained, 
the Bermuda cases are no justification for Britain's stoppage 
of our exports to Scandinavia, for forwarding to Germany by 
sea. These goods are to be forwarded to German ports which 
Britain admittedly does not blockade; namely, the German 
ports on the Baltic. British exports to Nassau were to be 
forwarded to Confederate ports which we were blockading. 



178 ECONOMIC ASPECTS OF THE WAR 

goods destined to be forwarded to Germany by sea. 
They were going forward by land. 

This fact — that the traffic was to continue to Ger- 
many by land — turned our Civil War precedents 
against Britain. In the same British note of Febru- 
ary 10 mention was made of the Matamoros cases, 
also of Civil War time. The Federal war vessels held 
up British goods destined for Texas via Matamoros, 
Mexico, on the Mexican bank of the Rio Grande. 
Brownsville, opposite Matamoros, was blockaded by 
the Federal fleet; Matamoros obviously was not. 
Our Supreme Court decided that we might seize only 
the contraband on board such ships, and then only if 
it had a clear destination for belligerent use. That 
is, absolute contraband destined overland to the Con- 
federacy was condemned, but all other goods with the 
same destination were ordered released. 

None of the copper seized from Dutch boats, while 
traveling to Germany via Rotterdam, was seizable 
under these precedents. Copper was not declared 
absolute contraband until October 29. 

For America to have interfered to greater extent 
than described with the lawful traffic between Eng- 
land and Matamoros would have been intolerable, and 
would never have been suffered by Great Britain. 
To be sure, the limitation imposed seriously impaired 
the tightness of our blockade of the Confederacy. 
But we had something other than our own wishes to 
consider. As the Supreme Court said: 



COPPER AS LAWFUL COMMERCE 179 

"Neutral trade (*) to and from a blockaded coun- 
try by inland navigation or transportation is lawful 
and therefore that trade, between London and Mata- 
moros, with intent to supply goods for Texas from 
Matamoros, violated no blockade, and cannot be 
declared unlawful. Such trade . . . with unre- 
stricted inland commerce between such ports and the 
enemy's territory, impairs undoubtedly, and very 
seriously impairs, the value of a blockade of the 
enemy's coast. But in cases such as that now in 
judgment, we administer the public law of nations 
and are not at liberty to inquire what is for the par- 
ticular advantage of our own or another country." 

England in September and October was not main- 
taining a blockade of Germany. Even had she main- 
tained one, the American "continuous voyage" cases, 
which she calls to her aid, would, if they had any 
application at all, declare illegal the seizure of 4,290 
tons of copper from the Dutch boats. And this was 
true quite apart from the further question as to a 
retroactive decree causing the condemnation of a 
free article of commerce by declaring it conditional 
contraband after it has set out upon its voyage on 
the high seas. The Sloterdyk and the Rotterdam 
were over halfway across the Atlantic when anathema 
fell upon their copper cargoes. 

It must not be supposed that the injury to this 
country was in any way measured by the 4,290 tons 
of copper illegally seized. That copper was eventu- 
ally paid for by the British Government. But Dutch 
consignees, and those whom they represented, sent 

*A11 but absolute contraband trade. 



180 ECONOMIC ASPECTS OF THE WAR 

in no more orders. No one continues to order what 
he cannot get. The purchase by Great Britain of 
9,500,000 pounds of copper, for which payment was 
made after a long delay, was a poor substitute for 
the cancelled normal trade of 12,000,000 pounds 
monthly with Dutch ports. The magnanimous action 
of His Majesty's Government in finally paying for 
the copper it seized did not support the men and 
families in Butte and Ray whose markets and whose 
ultimate employers were by that seizure obliterated. 

Great Britain in the September seizures did not act 
without law. However, what she acted under was not 
international law, but her own substitute for it; 
namely, the August 20 Order in Council. 

In that Order, we recall, His Majesty's Govern- 
ment repudiated the principle which its own prece- 
dents had done the most to create ; namely, that con- 
ditional contraband moving to the enemy territory 
is immune unless the captor can prove that it is des- 
tined for the enemy's hostile forces. The August 
Order made conditional contraband seizable when 
moving to anyone under control of the authorities 
of the enemy state ; which obviously banned all such 
traffic going to Germany. 

Yet this would not have affected the copper seized. 
It was moving to Germany through Holland, and was 
to be discharged in "an intervening port," which, 
according to the Declaration of London, freed it 
from suspicion as to its possible destination for 
German forces. The Order in Council made condi- 
tional contraband for Germany by indirect routes 



COPPER AS LAWFUL COMMERCE 181 

capturable under the same condition as if it moved 
direct. In plain words, it was capturable if it moved 
at all. Under this "law" the Dutch shipments 
described were seized. 

We have seen that in September measures were 
taken by England to put an end to the movement of 
copper through Holland to Germany. In October 
and November came the turn of Italy and the Scandi- 
navian countries to learn that they too must not 
play the middlemen for German buyers. British 
representatives in this country could report that in 
October a quantity of copper far in excess of October, 
1913, was exported from the United States towards 
the neutral countries in question. 

Exports of Copper to Neutral Countries Adjacent to Germany 
Comparison for October 1913 and 1914 

Increase in 
Oct. 1913 Oct. 1914 Oct. 1914 

Country Lbs. Lbs. Lbs. 

Holland 11,119,819 11,119,819 (decrease) 

Italy, 3,698,042 22,166,413 18,468,371 

"Other Europe" 1,939,327 13,670,445 11,731,118 



Total 16,757,188 35,836,858 19,079,670 

It is noted that in October Holland did not receive 
a pound of copper. That country had been disposed 
of as a possible purveyor to Germany. The Dutch 
had learned their lesson. The Holland-American 
Line would accept no more copper for carriage. 

Still more drastic measures were adopted toward 
Italy and Scandinavia in October, November and 



182 ECONOMIC ASPECTS OF THE WAR 

December. In October and November, fourteen 
steamers for Italy were detained and their 21,403,- 
200 pounds of copper piled high at Gibraltar.* In 
November and December, thirteen ships for Sweden 
were stopped by England and 12,555,200 pounds of 
copper taken off.* The Swedish copper lay in 
British east coast ports. 

Every pound of copper with neutral destination 
seized before October 29, the date of declaring copper 
absolute contraband, was seized illegally. The legal- 
ity of such action as to shipments that were already 
on the seas on October 29 is doubtful, even assuming 
that copper may properly be declared absolute 
contraband. 

England herself had appeared to feel technically 
justified in her September and early October seiz- 
ures of Dutch-bound copper while it was still condi- 
tional contraband. But the seizures of Swedish and 
Italian consignments promised to assume so vast a 
scale that the flimsy structure of the August 20 Order 
in Council and the September 21 contraband list did 
not look able to bear them. Moreover, the United 
States on October 22 addressed to England a pro- 
test, never published, on its interference with our 
commerce. So on October 29 copper was made 
absolute contraband. 

The justice of considering raw copper as contra- 
band is a subject worth considering. The British 
Government by its Order in Council of August 20 

* For the vessels detained, dates, cargoes and destination, 
see Appendix, p. 323. 



COPPER AS LAWFUL COMMERCE 183 

had accepted the Declaration of London as binding, 
precisely as though it had been ratified by His 
Majesty, except for certain modifications. That 
Declaration gives no authority for considering raw 
copper contraband. The items mentioned by Article 
22 in the first class (as always subject to treatment 
as contraband) are all manufactured goods. They 
do not include materials for ammunition. 

According to Article 23, this list could be in- 
creased by proclamation of a belligerent so as to 
include "such articles exclusively used for war as are 
not enumerated among the eleven groups of the first 
class." The protocol of the drafting committee indi- 
cates that this addition was to care for possible 
future inventions or discoveries. The committee 
admitted that it had specifically included in the con- 
traband list all known items that properly belonged 
there. Raw copper was of course known, and it was 
not included. 

When not a belligerent, His Majesty's Government 
has demanded more emphatically than any other that 
the contraband list should be restricted in war time 
to the narrowest possible limits. Great Britain has 
even appeared before the international public favor- 
ing the total abolition of contraband lists. Witness 
the charge of Sir Edward Grey to the British Delega- 
tion to the Second Peace Conference at The Hague: 

"His Majesty's Government recognize to the full 
the desirability of freeing neutral commerce to the 
utmost extent possible from interference by belliger- 
ent powers, and they are ready and willing for their 



184 ECONOMIC ASPECTS OF THE WAR 

part, in lieu of endeavoring to frame new and more 
satisfactory rules for the prevention of contraband 
trade in the future, to abandon the principle of con- 
traband of war altogether, thus allowing the oversea 
trade in neutral vessels between belligerents on the 
one hand and neutrals on the other to continue 
during war without any restriction, subject only to 
its exclusion by blockade from an enemy's port. They 
are convinced that not only the interest of Great 
Britain, but the common interest of all nations will 
be found, on an unbiased examination of the subject, 
to be served by the adoption of the course suggested. 

"In the event of the proposal not being favorably 
received, an endeavor should be made to frame a list 
of the articles that are to be regarded as contraband. 
Your efforts should then be directed to restricting 
that definition within the narrowest possible limits 
and upon lines which have the point of practical ex- 
tinction as their ultimate aim. 

"If a definite list of contraband cannot be secured, 
you should support, and, if necessary, propose regu- 
lations intended to insure that nations shall publish, 
during peace, the list of articles they mil regard as 
contraband during war, and that no change shall be 
made in the list on the outbreak of or during hos- 
tilities ■.* 

"A list might be prepared and submitted for 
adoption by the Conference, specifying the articles 
which in no event shall fall within the enumeration of 
contraband, e.g., mails, foodstuffs destined for places 
other than beleaguered fortresses, and any raw 
materials required for the purposes of peaceful indus- 
try. It is essential to the interest of Great Britain 

* It is instructive to compare this statement of principle" 
with the continued British action in this war of expanding the 
fixed contraband list of the Declaration of London. 



COPPER AS LAWFUL COMMERCE 185 

that every effective measure necessary to protect the 
importation of food supplies and raw materials for 
peaceful industries should be accompanied by all the 
sanctions which the law of nations can supply. 

"His Majesty's Government would further be glad 
to see the right of search limited in every practicable 
way, e.g., by the adoption of a system of consular 
certificates declaring the absence of contraband from 
the cargo, and by the exemption of passenger and 
mail steamers upon defined routes, etc." 

Obviously the British Government, when it pre- 
pares for the eventuality of being a neutral in war 
time, is no believer in an extended contraband list. 

If, as Sir William Ramsay tells us, copper is less 
properly considered as contraband than cotton is, 
there is indeed little excuse for declaring it contra- 
band of war. 

On December 26 we sent England a note protesting 
primarily against her seizures of copper on the high 
seas. It contained only the following reference to the 
inclusion of copper in the absolute contraband list: 

"The government of the United States does not 
intend at this time to discuss the propriety of includ- 
ing certain articles in the list of absolute and condi- 
tional contraband, which have been proclaimed by 
His Majesty. Open to objection as some of these 
seem to this government, the chief ground of the 
present complaint is the treatment of cargoes of both 
classes of articles when bound to neutral ports." 

But it was hardly to be expected that our authori- 
ties, while accepting the listing of rubber and hides 



186 ECONOMIC ASPECTS OF THE WAR 

as conditional and absolute contraband, respectively, 
would protest strongly against the inclusion of 
copper in the absolute list. Copper has a secondary 
connection with the operations of war. But both 
rubber and hides are so distantly removed from war's 
uses that they are on the free list of the Declaration 
of London. 

Had copper been kept off the absolute contraband 
list (it was off the first three months of the war), and 
if conditional contraband had been treated by Britain 
as in previous wars, the nearly 35,000 workmen in 
American copper industries laid off on August 1 
would have soon returned. As it was, these men were 
out of work until after the first of the year. Not 
until April, 1915, were the mines and refineries work- 
ing to 75 per cent of their capacity. Not until June 
were they fully employed, ten months after the lay- 
off on August 1. Senator Walsh of Montana de- 
clared in the Senate at the end of December : 

"Multitudes of the latter (the miners) in enforced 
idleness must make such provision as they can 
against the rigors of an inhospitable winter climate. 
No little destitution must follow, and great indus- 
trial loss." 

Nor did the loss fall entirely on the workmen. The 
Order in Council of August 20 cost the copper export 
trade $6,000,000 per month, the average exports to 
Germany. 

Yet in the early part of the war our main com- 
plaint is not with Britain's declaring copper absolute 



COPPER AS LAWFUL COMMERCE 187 

contraband. Up to October 29, 1914, the period 
with which this chapter has dealt, we protest against 
the illegal treatment of copper while Great Britain 
still carried it on her free or conditional contraband 
lists. 



CHAPTER X 

Copper as Contraband of War 

In the preceding chapter the propriety of Britain's 
declaring copper absolute contraband of war was 
discussed. Once that declaration was made, on 
October 29, and once it was accepted, the British 
Government had the right to prevent copper from 
moving to Germany direct or via the adjacent Euro- 
pean neutrals. 

/ After October 29 America's chief trials and losses 
sprang from the extraordinary severity with which 
England proceeded against trade with neutrals. In 
its eagerness to intercept all such trade which might 
by any chance get through to Germany, Great 
Britain went far towards making impossible even 
bona fide shipments to neutrals. The severe meas- 
ures which England took included the imposition on 
neutrals of re-export embargoes, the subjection of 
detained neutral shipments to unprecedented delays 
in the prize court, and finally the stoppage of our 
neutral copper trade until we submitted it to the 
complete direction of the British Admiralty. 

The other neutrals early followed the example of 
Holland in prohibiting the export of copper from 
their boundaries. The State Department at Wash- 
ington, as soon as the September copper seizures 



COPPER AS CONTRABAND OF WAR 189 

began, co-operated in the attempt to induce Euro- 
pean neutrals to lay these embargoes. On October 
5 the following Associated Press despatch was sent 
from Washington : 

"Secretary Bryan at once set to work to obtain 
from Holland, Italy, Spain, Norway, Sweden and 
Switzerland guarantees that copper imported from 
the United States would not be re-exported. These 
guarantees will be accepted by Great Britain. It is 
believed the neutral countries will not hesitate to 
approve the plan, which is similar to that already 
arranged with Holland with regard to foodstuffs." 

Yet even with these embargoes in existence, neutral 
trade was difficult to carry on. It is recalled that, 
according to the August Order in Council, ultimate 
German destination of a consignment to a European 
neutral would be presumed "from any sufficient evi- 
dence" and that it then devolved upon the neutral 
consignee to prove that the shipment was not going 
to Germany. The difficulty lay in knowing what 
proof of innocence would be satisfactory. 

For example, it was insisted by the copper trade 
that all of the copper seized at Gibraltar in October 
and November was destined for Italian consumption. 
The shipments were from the largest and most re- 
sponsible firms in this country, such as the American 
Smelting and Refining Company, the United Metals 
Selling Company, and the American Metal Company. 
The consignees were the largest and most responsible 
consumers in Italy, such as Corradini, Naples ; Schi- 
apparelli, Turin ; Unione, Genoa ; Trafilire and the 



190 ECONOMIC ASPECTS OF THE WAR 

Metallurgica, Leghorn. Moreover, for any of these 
dealers to have re-forwarded copper to Germany 
would have been in violation of an Italian law, espe- 
cially enacted to prevent such occurrences. 

Yet cargoes unloaded and detained on suspicion — 
like the 9,500 tons at Gibraltar — lay for indefinite 
periods without action of a British prize court and 
without any indication of what was to become of 
them. The first of this Italian copper was taken 
off at Gibraltar on October 26, the last on Novem- 
ber 18. Through December, January and February 
and into March these cargoes waited, unapproached 
by any prize court proceedings. Long before, the 
drafts which our exporters drew against these 
exports had been returned to them and had caused 
them financial embarrassment. 

Fortunately, we have the opinion of the great 
English jurist, Sir William Scott, with regard to 
the propriety of these leisurely proceedings. In 
giving judgment on the Madonna del Burso, seized 
in the last months of 1797, he severely condemns a 
three months' delay in disposing of the case. 

"It would be highly injurious to the commerce 
of other countries and disgraceful to the jurispru- 
dence of our own if any persons, commissioned or 
noncommissioned, could lay their hands upon valu- 
able foreign ships and cargoes in our harbors, and 
keep their hands upon them, without bringing such 
an act to judicial notice in any manner for the space 
of three or four months. The complaints which 
such a conduct tolerated by this country would pro- 
voke against it from foreign countries are not to be 



COPPER AS CONTRABAND OF WAR 191 

described; and it is not very easy to suggest how 
the real honor of the country, connected as it is with 
its justice, could be defended against such com- 
plaints." 

Further, the eminent jurist lays down the prin- 
ciple that a belligerent nation which is in the exercise 
of the rights of war is bound to find tribunals for 
the exercise of such rights, where neutrals should 
enjoy speedy and unobstructed justice. He dis- 
misses the plea that the "court's full calendar pre- 
cludes rapid trial," with the words: 

"It is no secret that this court has never thought 
it a breach of that equal justice which it owes to all 
suitors to suffer a cause to be interposed that from 
its magnitude of interests or other circumstance of 
just weight had a peculiar claim to pre-audience." 

In point of fact the copper at Gibraltar never 
came before His Majesty's prize courts. It was 
eventually bought by the British Government on 
March 18, 1915, four months to a day after the 
last consignment of it had been seized, and nearly 
five months after the first consignment had been 
captured. Before that, the British Admiralty had 
offered to buy it, but — a rather important detail — 
at less than the cost of producing copper. The offer 
was thus described by an American copper official 
in an interview in the Boston News Bureau of 
November 30: 

"The British Government not only blocks our 
mining companies from the Italian market, but, after 



192 ECONOMIC ASPECTS OF THE WAR 

having seized their copper, they open negotiations 
to buy it and intimate that they are prepared to 
pay for it a price that will net the shipper about 
101/2 cents a pound, less than the average cost of 
producing copper at the present time." 

However, on March 17, the copper men in this 
country were informed that their representative had 
made an arrangement with the British Admiralty. 
The Admiralty agreed to have 1,000 tons of the 
copper that was held at Gibraltar sold on the Lon- 
don market. The rest the Admiralty was to take 
at an agreed price, excepting for forty tons car- 
ried on the Ascot, which was still regarded as sus- 
picious. The Americans were to pay the expense 
of transporting the copper to London on a British 
government collier. 

During the first half of November, the copper 
exporters were desperate. Domestic consumption 
of copper was at a low ebb. Steamship lines to 
European neutrals were refusing to accept it for 
export upon any condition. The British Govern- 
ment was finding one excuse after the other for 
detention of such shipments ; there seemed no possi- 
bility of fathoming the British mind and discover- 
ing what would satisfy it. At last England itself 
solved the mystery and cut the Gordian knot that 
had baffled the copper producers and even the 
official minds at Washington. 

Great Britain decided what its own intention was 
and what would satisfy itself. As a result of this 
decision, Mr. Gardner, chairman of the board of 



COPPER AS CONTRABAND OF WAR 193 

Henry R. Merton and Company, Limited, of Lon- 
don, the world's leading copper merchants, arrived 
in America in early November, with peace and con- 
cord in his hand. He brought with him a glowing 
prospect for the copper interests, a prospect of the 
early trade revival for which they had longed. 

The story of Mr. Gardner's mission, of its wide 
and deep bearings, finally — to the credit of Ameri- 
cans — of its rejection by American copper people, 
is an honorable chapter in our history, even if in 
the spring of 1915 we were forced into practically 
the same surrender we had refused in the fall of 
1914. 

Under the conditions brought about by the war, 
practically the only copper supply available for 
countries that did not produce the metal was the 
American supply. The Merton plan was a very 
simple one. Mr. Gardner appeared with powers 
from his government that have never been ques- 
tioned. England would agree to take a large fixed 
monthly output of copper, upon the condition that 
American producers should ship to Europe through 
no other channels than British merchants. 

The offer was indignantly rejected, and on No- 
vember 16 Mr. Gardner returned to London, his 
prepared documents unsigned. 

Had the proposal met with acceptance, it would 
have meant the desertion by American producers of 
hundreds of old customers who consumed copper in 
neutral countries, and the transferring of copper 
manufacturing in large measure from these coun- 



194 ECONOMIC ASPECTS OF THE WAR 

tries to England, which alone could get the raw 
material freely. It would have meant, further, that 
England, controlling the world's supply of a mate- 
rial necessary for the manufacture of ammunition for 
small arms, would have an influence of very special 
potency over all countries not then at war. 

While these events were transpiring, there was 
developing a copper famine in neutral Europe. To 
be sure, England was theoretically willing to let the 
European neutrals, except Holland, receive the same 
monthly amounts of copper which they had received 
in 1913. The British Embassy at Washington said 
in a note handed to our State Department on 
November 11 : 

"A supply of copper sufficient for normal con- 
sumption in neutral countries will not be interfered 
with, provided adequate guarantees are given that 
the copper will not be transhipped to enemy coun- 
tries." 

Even if the British detention policy had allowed 
the neutrals to receive their normal quotas, these 
would have been insufficient for their needs. Italy 
is a good example. 

First, Italy was arming. This meant increased 
imports of copper for the Italian ammunition fac- 
tories and largely explained our abnormal shipments 
intended for Italy in October. Moreover, Italy, like 
most other European countries, has in normal times 
heavy imports of copper manufactures from Ger- 
many. In 1912, Italy imported $4,235,000 of 



COPPER AS CONTRABAND OF WAR 195 

copper manufactures and electrical apparatus from 
Germany. With Germany's importation of raw 
copper checked, that country naturally ceased ex- 
porting copper manufactures, retaining all the raw 
product available to her industries for domestic, 
especially military, uses. Italian manufacturers were 
therefore called on to supply what formerly had been 
imported, in products of copper, bronze and brass. 
In America we have seen the sudden growth of certain 
industries after imports from Germany were cut off. 
In Italy it could not have been different. 

The normal annual Italian consumption of copper, 
apart from that contained in sulphate, is over 
40,000 tons. In sulphate, 20,000 tons more are 
used. Copper sulphate, or what we call blue vitriol, 
is used throughout Europe to spray vines, for the 
purpose of destroying the phylloxera pest. Italy 
needed more copper from us to make the copper 
sulphate which she had hitherto purchased from 
Germany. She also needed copper to make sulphate 
and other products for France, for in the early 
months of the war the French copper industry was 
paralyzed. The high price of copper in Germany 
had induced German manufacturers to turn over to 
neutrals (Italy) the filling of many orders which 
they — the Germans — had booked. Finally the 11- 
cent price of copper during the fall months tempted 
Italians, like other good merchants, to buy stock for 
the future. 

England itself took in the first three months of the 
war a vast excess of copper over the volume for the 



196 ECONOMIC ASPECTS OF THE WAR 

same months of 1913. Italy, in process of arming, 
was under the same compulsion to have more copper; 
perhaps under a greater one, because Italy was more 
dependent than England upon the barred German 
copper industry. England's imports of copper 
from us in August, September and October were over 
64,000.000 pounds. Including these imports, and 
including the copper diverted from Dutch ware- 
houses and the quantities taken off steamers bound 
for Dutch, Scandinavian and Italian ports, England 
in those three months received 103,000,000 pounds 
of copper, an increase of 69,000,000 pounds over 
the same period in 1913. In August, September 
and October, 1914, there left our shores for Italy 
25,000.000 pounds of copper, 16,000,000 more than 
in those months of 1913. England, in suspecting 
and stopping those shipments, was refusing to allow 
Italy an increase less than one-fourth as great as 
England itself took. 

What has been said of Italy's need for extra 
copper, and the famine resulting from British deten- 
tions, applies with equal force to the Scandinavian 
countries. 

We have instructive evidence, in England's own 
experience, as to the importance of a stoppage of 
supplies from Germany in stimulating imports by 
neutrals from other countries. In parliament, on 
November IT, 1914, a member called attention to 
the large increase in exports of British coal to Hol- 
land and the Scandinavian monarchies. The mem- 
ber implied that some of this coal might be getting 



COPPER AS CONTRABAND OF WAR 197 

through to Germany, and adverted to the fact that 
Mr. Asquith's constituents were largely interested 
in the mining of it. Mr. Asquith explained that the 
increased exports were "not due at all to their being 
ultimately destined for Germany, but to the fact 
that these countries (the neutrals) were deprived 
for the time being of the supplies they have been 
accustomed to receive from the enemy country." 

The interests of the British exporters of copper 
manufactures were by no means hindered by a 
policy that kept every other country from getting 
copper at any price, while the British market was 
abundantly supplied. Neutral manufacturers found 
their supplies uncertain as well as high in price, and 
could not give the guarantee of delivery which the 
protected English manufacturer could give. The 
British exports of copper manufactures and copper 
sulphate mounted steadily in the fall months of 
1914. 

It is recalled that the October 29 Order in Coun- 
cil prohibited American shipments to neutral coun- 
tries "to order." This prohibition discouraged the 
copper trade in particular, for most copper exports 
are so consigned. Even if destined for a known 
buyer, a copper shipment is consigned to the order 
of the foreign agent or banker of the American 
shipper. The purpose of this is plain. The ultimate 
consignee might be unable, for some reason, to take 
delivery of the shipment upon arrival. The title 
then remains in the American shipper. Shipments 
"to order" allow our foreign representative, if he 



198 ECONOMIC ASPECTS OF THE WAR 

thinks best, to retain possession of the copper until 
the Italian or Swedish consignee has satisfied him 
with regard to payment. Once this assurance is 
given, the representative of the American copper 
firm orders the shipment delivered to the foreign 
buyer. 

Moreover, large American dealers regularly carry 
heavy stocks abroad. The United Metals Selling 
Company had 16,000,000 pounds of copper in 
Europe at the outbreak of the war. These stocks 
are replenished, normally, by constant shipments 
"to order." Shipments so coming forward may go 
into stock or be diverted to buyers as buyers are 
found. Great Britain was perfectly familiar with 
this method of doing business. The prohibition of 
"to order" shipments compelled a complete readjust- 
ment of the method of marketing and financing 
copper. 

As an excuse for Britain's detention policy, there 
came from London continued absurd tales of at- 
tempts to smuggle copper into Germany through 
the neutral countries of Europe. Some of the tales 
were gross plays upon popular ignorance of steam- 
ship practice. 

For example, the grave suspicions of the Allies 
were declared justified when copper was found con- 
cealed under a shipment of oats, in a ship unloaded 
at Marseilles. On November 21, London despatched 
to American papers the following report : 

"The Norwegian steamer Tyr has been detained 
at Glasgow, according to a despatch to the Central 



COPPER AS CONTRABAND OF WAR 199 

News. It says that 4,000 tons of copper ore, which 
is contraband of war, was found in the bottom of 
the Norwegian steamer's hold, hidden under a cargo 
of general merchandise." 

There is no claim made in either case that the 
copper in question was not upon the ship's manifest, 
or cargo list, open to inspection. Copper, being the 
heaviest of all cargo, is always placed in the very 
bottom of the hold to insure the stability of the 
ship. The lighter merchandise, such as oats, natu- 
rally is placed over it and "conceals" it. Were 
copper carried on deck where the boarding officers 
could see it at once, the ship would founder before 
she sailed. 

When in December the Italian and Swedish steam- 
ship lines resumed the carriage of copper, they 
imposed the condition that none should be "in 
transit" and none should be consigned "to order." 
Moreover, a Swedish shipment would be accepted only 
if a cable had been received from the home govern- 
ment specifically reciting that it was for domestic 
consumption. 

But even the sovereign voice of the state expressed 
in its re-export prohibition laws, and the certifica- 
tion of cargo by Washington Ambassadors of neu- 
trals, did not suffice to prevent seizure of copper by 
England. On December 28, the New Sweden and 
Soerland, bound for Sweden, were diverted to Eng- 
lish ports by English cruisers. One was relieved of 
730 tons of copper, one of 600 tons. In each case 
the shipment was accompanied by a statement from 



200 ECONOMIC ASPECTS OF THE WAR 

the Swedish minister at Washington that the copper 
was for Swedish use. 

At last the State Department was driven to pro- 
test. On October 22, they had sent an informal 
note, never made public, to England. The events 
of November indicated that the October protest had 
not severely touched the conscience of His Majesty's 
Government, that sensitive attribute of belligerent 
powers to which appeal is so generally made in the 
state documents of the war. As little was accom- 
plished at the almost daily conferences in Washing- 
ton between officials of our Statement Department 
and the British and French Embassies, devising ways 
and means for facilitating the trade in copper 
between this country and neutrals. 

Our December 26 note of protest to England was 
primarily on behalf of copper. It was stated that 
great interests in this country were being deprived 
of their lawful markets. The note pointed out that 
England was going beyond the limits of interna- 
tional law. It stated that Britain did not seem 
willing to let shipments go to European neutrals 
even when they had imposed re-export embargoes on 
American products. British interference, our note 
stated, was so severe that a legitimate trade in cop- 
per was suffering greatly. Therefore, we said, 
we felt justified in asking for information as to the 
manner in which England proposed to carry out 
her policy, in order that we might determine the 
steps necessary to protect our citizens. 

On January 7, we received an answer from Eng- 



COPPER AS CONTRABAND OF WAR 201 

land. It recited the fact that our exports of copper 
towards Italy and "Other Europe" from August 1 
to December 21 exceeded those of 1913. It then 
asserted that there was strong presumption that this 
surplus traffic was destined for one of England's 
enemies, and against this contingency England must 
protect itself. In view of the circumstances — the 
note continued — surely neither the government nor 
the people of the United States could expect Eng- 
land to strain the international code in favor of 
private American interests. 

This January 7 note was a preliminary answer to 
ours of December 26. On February 10, a final 
answer was despatched to us. It was a long note 
with plenty of general discussion. Mention was 
made of copper only once and then only inciden- 
tally. The note opened with a discussion of the 
reasonableness of the American complaint. 

"Towards the close of your note of the 28th 
December your Excellency described the situation 
produced by the action of Great Britain as a pitiful 
one to the commercial interests of the United States, 
and said that many of the great industries of the 
country were suffering because their products were 
denied long-established markets in neutral European 
countries contiguous to the nations at war." 

The British note then proceeded to indicate that 
American claims of distress due to the war had been 
exaggerated. It demonstrated that apart from 
cotton, American exports were getting to be larger 
than in 1913. (This was due chiefly to foodstuffs 



202 ECONOMIC ASPECTS OF THE WAR 

and war materials sent to the Allies.) The note 
stated that the difficulty of shipping to neutrals was 
probably closely connected with the shortage of ship- 
ping on the seas, due to the tying up of the German 
merchant fleet and the detention of certain British 
vessels in German harbors. It explained that steam- 
ships nowadays are larger than they were, and 
harder to search. It said that plans were alleged 
to have been made to move copper in cotton bales. 
It explained that since the German population had 
become identical with the army, all food for Germany 
was properly stopped. — All of which was interesting 
but in no way contributory to a solution of the 
copper situation. 

Meantime, events were working to the end which 
Great Britain desired: the submission of our copper 
trade to her control. In December the Italian 
Ambassador in Washington received a proposal 
that he should certify that copper to Italy was for 
domestic consumption. He indignantly rejected the 
suggestion. He indicated that to require this was 
an affront to his government, which had already 
prohibited the export of any copper from Italy. 
The Ambassador said, "Italy has given its word that 
no copper will be exported from its boundaries, and 
we shall do nothing from here to appease the appar- 
ent doubt of our integrity in the mind of England." 

But in January the Ambassador had melted. On 
January 7 the following was announced from Wash- 
ington : 



COPPER AS CONTRABAND OF WAR 203 

"Although the Italian Government considers that 
its embargo against the exportation of copper is 
sufficient guarantee, it has decided to help American 
shippers in getting their cargoes across the Atlantic 
without delay, by certifying the consignments before 
they leave the United States. 

"Under this arrangement the Italian Foreign 
Office makes an investigation of the business of the 
consignee and the purpose for which he seeks to use 
the import of copper. On learning that copper is 
strictly for home consumption, it authorizes a cer- 
tificate to that effect to be issued by the Italian 
Embassy at Washington, which is submitted to the 
British consul at the port where the shipment is 
being loaded." 

The reason for the Ambassador's change of heart 
was not far to seek. Copies reached this country 
of the Italian newspaper La Perseveranza, dated 
about the first of the year. They explained that 
the Italian Metallurgical Corporation, which sup- 
plies the state railways and the army and navy, had 
closed five works, throwing 3,000 men out of employ- 
ment. It closed them because of a lack of raw 
material to make copper tubes, plates and ammuni- 
tion. 

On February 22, a London despatch reported the 
procedure in the case of some copper bought by a 
Swedish contractor to fill a contract with his gov- 
ernment. The copper was thrown into the prize 
court and counsel for the contractor asked for an 
assurance from the British Government that it would 
not take and use the copper before the case was 
legally settled. The Attorney General said that the 



204 ECONOMIC ASPECTS OF THE WAR 

British Government, while it was prepared to act 
reasonably in the matter, could give no such assur- 
ance. If the Swedish minister desired to make any 
representations, he added, he must do so through 
the Foreign Office. The case was adjourned on the 
application of the Attorney General. 

To be sure, British copper dealers, known to the 
Admiralty and naturally favored by it, had less 
difficulty in getting into neutral countries the copper 
that they ordered forwarded from the United States. 
For example, when the steamship Italia was seized 
by the British at Gibraltar on November 8, there 
were aboard two consignments of copper sold to 
Schiapparelli, Turin. One had been shipped by the 
American Smelting and Refining Company, one by 
the United Metals Selling Company. The United 
Metals had sold through the mediation of an English 
house. The American Smelting and Refining Com- 
pany had sold direct. Only the United Metals 
shipment ever got past Gibraltar. 

Such incidents as this indicated clearly the only 
safe course to pursue. Despite the original repudia- 
tion of the British monopoly plan, some of the 
exporters had made concessions such as selling 
through British agents. After such plain demon- 
strations of the good results of such a policy, others 
who had held out longer began similarly to see the 
point. 

The sentiments of the exporters are well expressed 
in a letter from one of them early in April, after he 
had submitted to the English monopoly. 



COPPER AS CONTRABAND OF WAR 205 

"We are simply forced to take the action because 
of the fact that some $800,000 worth of our copper 
was held at Gibraltar, and also because some of the 
representatives of our leading competitors, resident 
in England, signed the Agreement some two months 
in advance of our signing. We held out as long as 
we could, chiefly because we did not wish to give up 
our position of independence in the matter of trading 
where and when it suited us best, without having to 
consult with the British Government." 

Getting no relief from the official action of the 
State Department the copper men had finally asked 
the State Department to authorize them to deal 
with the British Ambassador directly. Authorization 
was given. 

Soon after the middle of March an Agreement 
between the Americans and His Majesty's Govern- 
ment was made.* It recited that England would 
do her best to keep copper from Germany but did 
not desire to hinder exports to neutral countries 
whose re-export embargoes were found effective. 
While England could not forego her right of search, 
she was willing to let copper proceed to destination 
if the terms of this Agreement were fulfilled. Ship- 
ments were to be made only to named consumers 
(not to merchants) in the neutral countries and 
'copies of bills of sale were to be forwarded to the 
Admiralty. Bills of sale were to recite that the 
shipment was for neutral consumption. Under these 
conditions copper could be exported to Italy or 

* For text of Agreement, see Appendix, p. 324. 



206 ECONOMIC ASPECTS OF THE WAR 

Scandinavia. Exports to other neutral countries 
were not to be made except subject to permit of 
the British Admiralty. "Shipments of copper to 
Great Britain or her Allies may be made without 
restriction." 

This was the contract signed by American copper 
exporters. This was the consummation of the 
British detention campaign. 

What was the result on German military opera- 
tions of all this organized system of annoyance, 
detention and loss, designed to keep copper from 
reaching Germany? 

Economic pressure was no more effective in the 
case of copper than in the case of cotton. From 
London and from Copenhagen, Geneva and Amster- 
dam, via London and Paris, pathetic tales were 
forwarded of schoolboys in Germany begging door 
knobs for the military, housewives being stripped of 
copper kettles and pans, and roofs being de-cop- 
pered. But those who had been in Germany told no 
such tales. 

German copper consumption in 1913 was 256,000 
long tons. In order to keep the works operating, 
the German factories carry a stock of three months' 
supplies, about 64,000 tons. Because of large 
imports in the months just preceding the war, it is 
likely that on August 1 a supply much larger than 
64,000 tons was on hand at the factories. In addi- 
tion to this, on August 1 there were on hand in 
German warehouses 10,000 tons. German raw cop- 
per production in 1913 was 50,000 tons, and no 



COPPER AS CONTRABAND OF WAR 207 

doubt it was largely expanded after the war began 
by intensive working of the mines. Probably there 
were readily available not less than 50,000 tons of 
old metal. This made a total of at least 174,000 
tons available for the first year. Further, the needs 
were reduced by the halting of Germany's large 
exports of copper products, amounting in 1913 to 
125,850 tons, and the interruption of internal 
electro-technical developments. 

There is a very large supply of old copper in 
Germany. The average annual consumption in 
recent years has been 225,000 tons of raw copper 
and average exports have not exceeded 100,000 tons, 
leaving 125,000 tons every year in the country. In 
case of need, this supply would care for military uses 
for an indefinite period. 

A vast amount of scrap metal is brought forth 
by a rise in prices. At the end of 1914 the German 
price quoted was 200 marks per kilo, or at the then 
rate of exchange, 20% cents per 100 pounds. Scrap 
was pouring on the market just as it did in the 
eighties when Secretan's copper corner failed. Sec- 
retan got control of the world's supply of raw cop- 
per, but those who backed him could not finance 
the purchase of the huge amounts of scrap copper 
brought forth by the higher prices which the corner 
was causing. 

A large quantity of copper has been recovered 
from used ammunition, and taken from positions cap- 
tured from the enemy. No one has yet thought of 
requisitioning the hundreds of thousand tons of 



208 ECONOMIC ASPECTS OF THE WAR 

copper wire on the street railways of Germany. 
Before they are touched, the wiring and roofs of 
Belgium and Northern France will be stripped. 

Invention of substitutes provide still another 
resource. It has been reported that Krupp has 
invented a soft steel which serves very well in place 
of copper. 

One is tempted to subscribe to the opinion of one 
of the leading copper dealers of America, expressed 
at the end of December : 

"Without denying the fact that the cutting off 
of the supplies of copper is annoying to the highly 
developed German industry, I believe it is of minor 
importance for the German army and navy, but I 
am sure the principal sufferers are the mine owners, 
miners and smelters in this country who are deprived 
of their best market. 

"When 1914 statistics are going to be available 
you will find that while American copper production 
has been materially reduced owing to the war condi- 
tions, England and her colonies have continued to 
produce without any serious interruption; in other 
words, America though neutral and disinterested has 
to foot the bill for England's efforts to starve Ger- 
many, while the real profit goes into the pockets of 
the German copper mining companies and scrap 
dealers. 

"England has gained little, America has lost much, 
while Germany is annoyed without being hurt." 



CHAPTER XI 

The Export Situation 

A discussion of the effect of the Great War upon 
American interests would be lacking if it were not to 
include a consideration of our war exports. They 
demand attention for several reasons. There is 
general misinformation regarding their nature and 
extent and regarding the prosperity which they 
promise the country. The large extent of our ex- 
ports during the war period has been frequently cited 
in the notes of Great Britain, both openly and by 
implication, as a factor which should influence the 
minds of the American public in their opinion regard- 
ing the stoppage of our normal trade with other 
belligerents in the war. Finally, the dependence of 
the Allies upon the United States for great quanti- 
ties of war supplies, especially of munitions, gives us 
a vast economic power which might be used by this 
country, under clearly demonstrated necessity, for 
the protection of its proper rights and interests upon 
the seas. 

During the greater part of the fiscal year 1915 
(the year ended June 30), our exports were very 
large. The great extent of exports, together with 
a sharp falling off in imports — more marked than 



210 ECONOMIC ASPECTS OF THE WAR 

ever since the "blockade" of Germany — resulted in 
a large monthly balance of trade in our favor; that 
is, a large excess of exports over imports. In the 
five months ending August, 1914, we had an adverse 
balance of trade each month, meaning greater im- 
ports than exports. From September on, exports 
exceeded imports. By September, 1914, those fac- 
tors were working which were to expand our foreign 
sales to very large totals, and which operated with 
increasing effect for many months. This develop- 
ment since September may be illustrated as follows : 

Exports and Imports by Months, September 1, 1914 
to June 30, 1915 

Exports Imports Excess of Exports 

September... 156,052,333 139,710,611 16,341,722 

October 194,711,170 138,080,520 56,630,650 

November... 205,878,333 126,467,062 79,411,271 

December... 245,632,558 114,656,645 130,976,013 

January 267,879,313 122,372,317 145,506,996 

February 299,805,869 125,123,391 174,682,478 

March 299,009,563 158,040,716 140,969,347 

April 294,470,109 160,576,106 133,894,093 

May 273,768,093 142,284,851 131,483,242 

June 268,601,599 157,746,140 110,855,459 



This increase in our exports was entirely to 
Europe (including England) for Europe alone had 
the money to buy. Other continents buy from us, 
normally, with money loaned by Europe, or with the 
proceeds of their sales to Europe. Since the war, 
the monied European powers have been so drawn 
upon by war expenses that they have had no surplus 



THE EXPORT SITUATION 211 

to lend away from home, and no money to spend for 
anything but the necessities of life. Germany was 
prevented by British sea power from getting any- 
thing that was on the British absolute or conditional 
contraband list, and this included nearly every 
article in trade. The blockade affected other large 
sellers to Germany exactly as it affected us. And 
when the purchasing power of South America, for 
example, is crippled, we too are touched. All this 
meant that South America, Africa and Asia could 
not sell their chief customers nor borrow from their 
customary bankers. Hence they had no money with 
which to buy from us. 

It is this condition that has disappointed the opti- 
mists who at the beginning of the war prophesied that 
America was going to sell to the oversea world what 
England and Germany used to sell. But the world 
in question could not buy from anyone. So, though 
we may sell them a larger proportion of their whole 
purchases than formerly, it turns out that our 
actual sales to this extra-European world are 
smaller than before the war. International trade is 
a great co-operative venture. No such disturbance 
as the present can occur among certain of the part- 
ners without adversely affecting all the others. 

Our increased sales, then, have been to Europe. 
But the increase has not meant for us that prosperity 
which it would bring in normal times. Normally 
such a growth in exports would be extended to our 
whole field of industries and agriculture. In the 
present case, the large increase in some articles is met 



212 ECONOMIC ASPECTS OF THE WAR 

by a large decrease in others, a decrease in articles 
whose producers are absolutely dependent for their 
prosperity upon the state of the export trade. Such 
an article is cotton. 

Our exports are "spotty." It is a condition that 
can no more mean prosperity to the country than an 
industrial community can be called prosperous when 
a part of its men are working overtime earning high 
wages arid the other part are unemployed and grow- 
ing poorer each day. 

Contrary to the general impression, our main ex- 
ports to Europe have not been the weapons of war. 
It is not possible to find the exports of big guns ; they 
are not listed in the government statistics. But our 
ordnance shipments have not been large. For the 
nine months from September 1, 1914, to May 31, 
1915, we shipped $34,000,000 of munitions, com- 
pared with $6,000,000 in the same nine months of the 
previous year. In munitions are included: firearms, 
cartridges, gunpowder and other explosives except 
dynamite. The increase in munitions exports is 
seen to be only $28,000,000. To be sure, shrapnel 
is not included in the munitions list; it also cannot 
be found in the official export figures. Even if we 
could add the statistics for ordnance and shrapnel, 
the larger figure would not go far towards explain- 
ing the vast growth of our export balance since 
November, 1914. 

The explanation for our great increase in exports 
is found rather in the group we call food, especially 
in breadstuff's. By breadstuff's are meant flour and 



THE EXPORT SITUATION 213 

grain, except oats, the latter cereal being more cor- 
rectly classed as forage. Some of the reasons why 
the European demand for our food was especially 
heavy have already been noted. Excepting for 
North America, the grain crops of extra-European 
countries in 1914 were below normal. The closing 
of the Dardanelles and German control of the Baltic 
held the great Russian and Balkan supplies of grain 
away from belligerent Western Europe. Neutrals 
like Scandinavia, Holland, Italy and Greece, which 
had always bought largely from the Black Sea, now 
turned to America. The great rise in the exports 
and the price of breadstuff's, especially wheat and 
wheat flour, were reviewed in Chapter II. In the nine 
months ended with May we shipped $431,000,000 of 
breadstuffs, compared with $107,000,000 in the pre- 
vious year. The growth of $324,000,000 showed 
that the disappearance of Germany as an export 
market for our wheat was far more than counter- 
balanced by the great demand of the rest of Europe. 
In this one item the growing balance of trade ,is 
chiefly explained. 

In the case of meat products, a similar development 
occurred. For some time the- communication of the 
Allies with the Argentine was unsafe, owing to Ger- 
man cruisers in the South Atlantic. Even when those 
seas were cleared, our shipments continued large, the 
vast supplies required to provision the armies of the 
Allies causing a recovery of our export meat trade, 
which for a decade had been on the decline. The 
demands for a fighting army are far above those for 



214 ECONOMIC ASPECTS OF THE WAR 

the same number of men in peaceful occupations.* 
The European population in the field has advanced 
to a scale of living which., it never knew before. 
Further contributing causes to the large meat orders 
from this country included the German occupation of 
part of the producing area of France ; and the large 
purchases made by American relief bodies on behalf 
of the Belgians. We exported in the nine months 
$160,000,000 of meat products, $54,000,000 more 
than in the same months of the previous year. We 
sent $11,000,000 of dairy products, an increase of 
$9,000,000. 

A similar advance was in our shipments of sugar. 
The stoppage of German exports to England 
resulted in keeping nearly half a million tons of 
German sugar at home, where it was made into cattle 
fodder. England therefore had to turn to us for her 
supply. To prevent a too great increase in price, 
she tried the experiment, which was not altogether 
happy, of a government monopoly of the purchase 
and distribution of sugar. Our sugar exports in the 
nine months to the end of May amounted to $21,000,- 
000, which was $20,000,000 more than in the same 
months of the year before. Finally, there was a 
growth of $4,600,000 in our shipments of vegetables. 

In forage there has been another remarkable in- 
crease. In the nine months' period we exported $71,- 
000,000 of forage: oats, hay, cottonseed cake and 
meal. This was $60,000,000 more than in the same 

* Exports of canned beef have increased from $350,000 to 
$9,900,000. 



THE EXPORT SITUATION 215 

months of the year before. Five-sixths of the 
increase was in the item of oats alone. As will 
appear later, our exports of forage were paralleled 
by our shipments of horses and mules to eat the 
forage ; that is, to eat it for the brief period during 
which an army horse or mule continues to enjoy the 
gustatory pleasures of this world. 

Another great group of exports was hides, leather 
and- footwear, not including harness and saddlery, 
which belong better in the category of war supplies. 
The largest increase was in unworked leather and 
miscellaneous leather products, though there has been 
a notable movement of men's shoes and of hides. In 
the whole group we exported $68,000,000 or $48,- 
000,000 more than in the same months a year ago. 

Somewhat closer to the business of war were our 
exports of textile manufactures, mostly the result 
of great equipment orders from the Allies. Probably 
the largest single item was blankets, then woolen uni- 
forms, then cotton knit goods. Of these items and 
of wool and woolen rags we sent abroad $35,000,000, 
which is $30,000,000 more than last year. 

Nearer yet to the direct equipment of war we may 
make a group called war supplies. It includes 
horses, mules, harness and saddles, aeroplanes, com- 
mercial automobiles, automobile tires, wagons, gas 
oil and fuel oil, barbed wire, horseshoes and surgical 
appliances. The largest increase in this group was 
in the means of transport : horses, mules, commercial 
automobiles. In nine months ending May 31, 1915, 
we sent to the war 250,000 horses, compared with 



216 ECONOMIC ASPECTS OF THE WAR 

18,000 in the same period of the year before. We 
sent 53,000 mules, compared with 4,000 in 1913- 
1914. We exported $30,000,000 of commercial 
automobiles, which is $29,000,000 more than in the 
previous year. In the whole group of war supplies 
we sent abroad $148,000,000, an increase of $119,- 
000,000 over the year before. 

It is apparent that up to the present time our 
great contributions to the carrying on of the war 
have been indirect contributions rather than muni- 
tions. Greater than the increase in munitions ex- 
ports has been the increase in material for making 
munitions. Under this head should be included lead, 
zinc, brass and brass manufactures, wire rods, steel 
billets and metal working machinery. The last item 
means lathes for turning out shrapnel. American 
lathe makers have been totally unable to meet the 
demand for their product on the part of those in this 
country and abroad who have shell orders to fill. 
In this whole group the exports of zinc — generally 
called spelter — overshadow all others. This is 
because the German and Belgian stocks of spelter, 
which normally supply the world outside the United 
States, are cut off from the Allies. Spelter ac- 
counts for over one-third of the increase in the group, 
the foreign sales of which amounted to $62,000,000 
in the nine months ending May 31, $46,000,000 more 
than in the same months of the year before. 

Combining these groups and comparing them with 
the whole exports of the United States, we have a 
picture of the present situation. 



THE EXPORT SITUATION 217 

Exports of United States, Classified Comparison of Nine 
Months' Periods Ending Mat 31, 1914 and 1915 

Nine Months Nine Months 
Ending May Ending May Increase 
31, 1914 31, 1915 in 1915 

Group I. Munitions $6,283,953 $34,421,595 $28,137,642 

Group II. Material 
for making muni- 
tions 16,291,624 62,360,423 46,068,799 

Group III. War 

Supplies 25,856,921 147,702,807 121,845,886 

Group IV. Textile 

manufactures 5,293,155 35,239,110 29,945,955 

Group V. Hides, 
leather and foot- 
wear 20,599,959 60,150,388 47,550,429 

Group VI. Food- 
stuffs 218,390,743 627,417,302 409,026,359 

Group VII. Forage 10,419,041 70,640,989 60,221,948 

Total, Groups I-VII 303,035,596 1,045,932,614 742,897,018 

All other Exports... 1,529,255,043 1,146,942,879 382,312,164* 

TotalExports,U.S.A. 1,832,290,639 2,192,875,493 360,584.854 

What is evident is that our total exports for the 
nine months' period did not grow to any amazing 
degree. There was a shifting of our output. We 
were making and selling what we never made and 
sold before. We were not selling much that we have 
always sold. A huge decrease is seen in the exports 
of articles not included in Groups I-VII. For ex- 
ample, there was a great falling off in cotton exports, 
a decrease of $216,000,000 for the nine months' 
period. Naval stores decreased. Iron and steel 
manufactures fell off $17,000,000. Agricultural 
implements decreased $20,000,000, Lumber and 

*Decrease 



218 ECONOMIC ASPECTS OF THE WAR 

manufactures of wood dropped $41,000,00. There 
were similar decreases in many other articles such as 
phosphate rock, mineral oils, electrical machinery 
and copper (copper fell off $36,000,000) ; though the 
lower exports of copper were, as we know, finally com- 
pensated by higher sales at home, to the ammunition 
makers. These things went to make up the decrease 
of $382,000,000 in our exports outside of the seven 
groups. 

It may be doubted whether such a situation is a 
healthy one. It is a poor consolation to the pinched 
cotton farmers to know that the ammunition makers 
in Bridgeport are working day and night, that the 
machine tool works in Hartford cannot fill their 
lathe orders, that the railroads haul trainloads of 
war auto trucks from Detroit, that the harness 
makers of Cincinnati are full of business, or even that 
the wheat farmers of the West and the packers of 
Chicago are rich. Lumbermen cannot be shifted to 
a shoe factory and the tobacco raisers of Kentucky 
and Tennessee are not trained to make shrapnel 
shells.* 

* On August 5 a New York importer of German goods said 
in the New York Times: "England says that the money that 
is being earned by manufacturers of arms and war supplies 
should be a compensation for the losses sustained by the im- 
porters. But let me say that if I were to go to any manu- 
facturer who has earned money on war contracts and say to 
him, 'Brother, through obeying the British Order in Council 
I have lost my business, money, home and everything I possess 
in the world. Will you kindly let me have $100,000 of the 
fortune you have made on war supplies, to put me on my 
feet?' — you can pretty near guess his answer." 



THE EXPORT SITUATION 219 

Until those who sell lumber, tobacco, phosphate 
rock, cotton, mineral oil, agricultural implements, 
and naval stores reach their accustomed foreign 
markets, we shall not again be a prosperous country. 
It is noted that most of our distress products come 
from the South. To a large degree the distress of 
these products is due to the ban which England laid 
upon the important German market. The removal 
of that ban will be the largest single step towards a 
return to prosperity. 

Nor is it a matter for the South alone. Our 
inland business dwarfs our foreign trade. No one 
knows the exact figures of our interior exchanges but 
it is estimated that the volume of our inland trade is 
sixty times the volume of our foreign trade. The 
figures of export trade are published by the govern- 
ment and flashed in the papers. But most manu- 
facturers know that on their books the foreign orders 
are a small quota of the whole. Most of our pro- 
ducers, especially of our industries, are perhaps sixty 
times more interested in market conditions at home 
than those abroad. The fact that some makers of 
clothing can sell to Europe does not compensate the 
clothing industry for not being able to sell to the 
South. So with the wagon and leather industries. 
We are all interested in the state of the South, and 
in its relief, not merely in some abstract way or even 
from humanitarian motives. We are also interested 
because we want the South to be able again to buy 
from the rest of the country. 



220 ECONOMIC ASPECTS OF THE WAR 

Our main problem will not be in any way solved by 
the entrance into the export trade of the vast sup- 
plies of ammunition contracted for and now in the 
course of manufacture. They will go simply to make 
the rich richer. 



CHAPTER XII 

The Import Situation 

One of the outstanding features of this 1 war is* its 
amazing demonstration of the economic power of 
England. Once Sir Walter Raleigh said that the 
nation which controlled the shipping of the world 
controlled the trade of the world and so the world 
itself. Sir Walter Raleigh stated the principle ; the 
proof was in the great European War. 

England at the outset of the war owned over half 
the merchant shipping in the world. This she with- 
drew from all service that might aid her enemies. 
She controlled the marine insurance business. The 
withdrawal of English companies from participation 
in the underwriting of risks on German-American 
trade was one of the obstacles to the recovery of that 
trade. The London discount market, through which 
most of international trade had been financed, was 
withdrawn from the service of England's enemies. 

All this was a legitimate use of British economic 
power. For a belligerent to forbid trading with the 
enemy is as old as war itself. But England went 
further than this. We see uses of her power that 
strike us as more novel. The British naval power was 
used so to threaten with starvation the neutral 
nations of Europe that they agreed not only not to 



222 ECONOMIC ASPECTS OF THE WAR 

allow goods to pass through their territories in tran- 
sit to Germany, but they even agreed not to supply 
Germany with their own products. Neutral mer- 
chants submit their books to English accountants 
who satisfy themselves that none of the neutral im- 
ports are resold into Germany. 

Early in the war the British cut the German cable, 
leaving us largely dependent on British and French 
cables for communication with northern Europe. 
When Italy entered the war, our dependence was 
complete. No message to European neutrals is 
allowed to reach its destination if the British censor 
imagines that it refers to a transaction that may be 
benefiting Germany. Sweden has complained that 
this exercise of the censor's imagination has seriously 
impaired her legitimate trade with us. In August, 
1915, the packers were in Washington complaining 
of the cable censorship. They complained that, after 
creating the Netherlands Oversea Trust and desig- 
nating it as the sole consignee for our exports to Hol- 
land, Britain was refusing to let our cables reach 
even the Trust. 

These cases represent unprecedented interference 
with the course of neutral trade. And yet Americans 
do not excite themselves unduly because of what 
Britain is doing to Denmark or Holland, even though 
it is our exports which are there being subjected to 
British supervision. 

Another set of cases comes nearer. Some of them 
are detailed in this chapter. Rubber from the British 
empire was withheld from the American trade until 



THE IMPORT SITUATION 223 

Americans signed an agreement not to manufacture 
rubber goods — from any rubber whatever — for the 
enemies of England. So with wool. So with tin. 

Because of a blockade which we do not recognize, 
we are cut off from imports from Germany, and we 
face serious industrial disturbance through the fail- 
ure of the potash and dyestuffs supply. 

We already have seen that the Admiralty forced 
our copper exporters to place in its hands the direc- 
tion of our copper trade. The Liverpool Cotton Ex- 
change now apparently blacklists all Americans who 
do not sign an agreement not to deal with the enemies 
of Britain. 

It is indicated by Great Britain to the steamship 
lines carrying our exports that American shipments 
to neutral countries, if approved by British consuls, 
are less likely to be detained. Steamship lines refuse 
to take shipments until they are so approved. British 
consuls in American ports are engaged in accepting 
affidavits from American shippers that none of our 
exports for neutral countries will get through to 
Germany ; though in our official protest to England 
we assert that for us to accede to the purpose of the 
ineffective British blockade would be to violate our 
neutral obligation to trade with both belligerents. 

It is impossible to reach this point without feeling 
that our American sovereignty is involved. 

In 1793 E. C. Genet, an agent of the French 
Government, was operating in this country, France 
then being at war with Great Britain. Thomas Jef- 
ferson wrote to him in June, 1793 : 



224 ECONOMIC ASPECTS OF THE WAR 

"It is the right of every nation to prohibit acts of 
sovereignty from being exercised by others within 
its limits, and the duty of a neutral nation to pro- 
hibit such as would injure one of the warring 
powers." 

It is not far from an act of sovereignty when a 
British consul decides whether we may ship any- 
thing — contraband, conditional contraband or "free 
list" — to neutral countries in Europe. When this 
sort of sovereignty is permitted and is exercised for 
the purpose of injuring the Germanic Allies, those 
Germanic Allies might perhaps justly feel they have 
cause for complaint against us as a neutral nation. 

The present chapter and the following are the 
story of the strange documents we had to sign to 
get certain necessary imports from the British em- 
pire or even from the neutral world, of the stoppage 
of our imports from Germany and Austria, especially 
dyestuffs and potash, and of the pending loss to our 
Federal treasury from the disappearance of custom 
revenues from German goods. 

First with regard to imports that do not come 
from Germany. The most important of these are 
rubber, wool and tin. At least part of our supplies 
of each of these comes from British colonies. Great 
Britain allows us to get supplies from British colonies 
only on condition that our manufacturers refuse to 
ship to Germany either these materials or the prod- 
ucts of them. In practice we may not ship raw 
materials or their products even if the materials do 
not come from British colonies ; even if they come 



THE IMPORT SITUATION 225 

from the United States itself. This policy of Great 
Britain has been aided by her manipulation of the 
contraband list, particularly by her making absolute 
contraband of wool and rubber, both on the free list 
of the Declaration of London. 

The United States normally consumes about one- 
half the world's output of rubber, whose production 
has increased rapidly with each succeeding year. 
Over half of our material is grown in British colonies. 

Apart from the obstacles in finance and transpor- 
tation, soon overcome, there was no difficulty in 
getting rubber in the early months of the war. In 
August, 1914, we received 6,500,000 pounds less 
rubber than in the previous August, but after that 
month our imports steadily reached higher figures 
than in the corresponding period of the previous 
year with the single exception of January, which will 
be explained. 

The chief excitement in the rubber trade during 
the first four months of the war was provided by the 
exploits of the German cruiser Emden, which in the 
course of her destructive career sank two dozen mer- 
chant vessels, three of them carrying $1,000,000 
worth of rubber. The indirect influence which the 
Emden exerted, in the way of discouraging shipments 
from Ceylon and Singapore, was considerable. When 
the cruiser was sunk November 10, rubber prices de- 
clined, because these Far East supplies were free to 
move. Values were soon to recover, however, because 
of England's embargo on the exportation of rubber 
from the British empire. 



226 ECONOMIC ASPECTS OF THE WAR 

On September 21, London had declared rubber and 
rubber goods to be conditional contraband, making 
it impossible for our dealers to export rubber and its 
products to Germany, and difficult to ship it to adja- 
cent neutrals because of the suspicion which England 
cast upon such cargoes. For example, the rubber 
and copper for Italy in the cargo of the American 
steamship Kroonland led England to unload this 
steamer partly and subject her to a long detention at 
Gibraltar near the end of October. On October 29 
rubber tires were made absolute contraband. 

Still England was not content. The British offi- 
cials believed that rubber goods and raw rubber 
were going through to Germany from this country, 
via adj acent neutrals, under false declarations on the 
ship manifests. Therefore on November 12 the ex- 
portation of raw rubber was forbidden, from all 
parts of the British empire to all destinations except 
England. The rubber trade at once became worried 
and appealed to the State Department. The State 
Department did not seem able to help the situation, 
and though American dealers offered re-exportation 
guarantees as a condition of being allowed to receive 
raw rubber, Great Britain seemed unwilling to accept 
them. 

Because of the large volume of rubber on the seas 
for America at the end of November, this prohibition 
did not at once affect our receipts. Not until Janu- 
ary did the imports sink below the corresponding 
month of the year before. Meantime, however, the 
rubber trade was getting alarmed. The Rubber Club 



THE IMPORT SITUATION 227 

issued a statement saying that the employment of 
250,000 men was imperiled, and that, if the embargo 
continued, half of the 65,000 tons of rubber which 
the trade needed for 1915 would be cut off. 

By the end of December a peculiar problem had 
arisen, due to the high prices ruling and the uncer- 
tainty as to how long the embargo would last. It 
was apparent that if the embargo continued long 
there would be a large accumulation of raw rubber in 
the British market, and that the release of this 
supply would so depress the price as to occasion 
serious loss to prudent American manufacturers who 
had bought supplies at the higher December prices, 
compared with those who took a risk, waited until the 
ban was lifted and later bought their rubber cheaper. 

In December the large rubber interests arranged 
that B. G. Work, president of B. F. Goodrich and 
Company, should visit London and attempt to 
arrange for rubber imports into this country. He 
found the British Government none too eager to co- 
operate with him, because of its conviction that rub- 
ber goods were reaching British enemies from the 
United States, and because of what it evidently con- 
sidered as the suspicious action of the American 
Government in withholding the publication of ships-' 
manifests for thirty days after the ship sailed. 
Nevertheless, the negotiations of Mr. Work were 
successful, partly owing to a promise on the part of 
the Rubber Club and the Rubber Association of 
America jointly to seek the co-operation of the 
Treasury Department in investigating and prevent- 



228 ECONOMIC ASPECTS OF THE WAR 

ing illicit practices, such as false declarations of 
exports to neutrals adjacent to Germany. 

In his January 7 note, Sir Edward Grey, in 
answer to our protest of December 26, speaks of an 
arrangement by which Americans were to be allowed 
to get rubber. Under proper guarantees, provi- 
sional licenses to ship to the United States were, he 
said, being granted to British rubber exporters. 

On January 8 Washington despatches, inspired by 
the British Embassy, announced the conditions which 
Americans must fulfill. Large manufacturers were 
allowed to have rubber consigned to them direct, 
upon condition of their giving a bond in London 
which would be forfeited if they were caught export- 
ing or allowing exportation to Europe. American 
dealers in rubber, as distinct from manufacturers, 
were to be allowed to get rubber only by having it 
consigned to a New York bank, to be delivered to the 
buyer when he filed with the British consul general 
in New York a guarantee against re-export which 
was satisfactory to that official. 

The leading manufacturers in the country signed 
a guarantee, undertaking not to sell or export any 
raw, waste or reclaimed rubber, except to England 
and British possessions. Raw rubber then in the 
hands of American producers was to be used in their 
factories, and not sold to anyone. The manufacturer 
bound himself to execute no orders for manufac- 
turered goods for any enemy of Great Britain. 
Orders for European neutrals were to be filled from 
stocks previously accumulated in Europe, or, if 



THE IMPORT SITUATION 229 

manufactured in America, were to be shipped first 
to London and re-exported thence under license. A 
distinctive mark was to be put upon all products 
exported or sold for export and notice was to be 
given to His Majesty's consul general of shipments 
destined for non-European countries. The manu- 
facturer pledged himself not to sell rubber manu- 
factures to any person in the United States without 
first ascertaining that the person would not export 
the goods to Europe except to Great Britain or her 
Allies. 

This guarantee was published in May by the 
Rubber Club, with a request to customers to co- 
operate with the manufacturers in preventing rubber 
from getting to the Teutonic Allies, and so avoiding 
a second British embargo. 

But more than good will on the part of dealers 
was required. The manufacturers, having obligated 
themselves, proceeded to bind their customers, the 
latter being required to sign an agreement of which 
the following is a copy : 

"We hereby agree that any quotation asked for, 
and any purchases made by us from you or another 
of any of your products, shall be in each and every 
case only for domestic use or shipment to Great 
Britain, France or Russia. We pledge ourselves to 
this fact, and agree that the execution of this docu- 
ment shall be binding on us for such length of time as 
you shall consider it to be effective, and cancellable 
only by you. 

"We further agree to submit to any and all inves- 
tigations that may be necessary on your part, and 



230 ECONOMIC ASPECTS OF THE WAR 

to give free access to any and all of our books, if 
called on so to do, to establish the fact of our non- 
exporting, or selling to another to export, in viola- 
tion of this agreement. 

"And further, we agree that any order, even 
though accepted by you, may be cancelled without 
redress on our part at your option, for any cause 
whatsoever, during the period that a state of war 
exists abroad, between Great Britain and any other 
country. 

"In case we tender any order that is for shipment 
out of this country, we will in each instance state 
thereon its destination." 

It will be noted that the guarantee signed by the 
manufacturers with the British Government bound 
them not to manufacture any goods for the enemies 
of Great Britain, whether made of British-grown 
rubber or not. It is supposable that a manufacturer 
might have refused to sign the agreement on the 
ground that it was a combination in restraint of 
trade, and might have declared that he would work 
with Brazil rubber and sell his products where he 
chose. But Brazilian rubber is of a different quality 
from plantation rubber from Ceylon and the Straits ; 
and manufacturers cannot do without the British 
material. 

Moreover, without signing the agreement with the 
British Government, no American manufacturer 
could get Brazilian rubber. The product of Brazil 
could get to the United States at this time only via 
England; or, if it came direct, via the Booth Line. 
But the Booth Line was an English concern and 



THE IMPORT SITUATION 231 

would accept no rubber for New York unless con- 
signed to the order of the British consul general. 
The latter would deliver, naturally, only to the 
faithful. 

It is true that rubber or its manufactures did get 
into the hands of dealers who would have been willing 
to sell to Germany. But they could not ship it. 
There were no steamship lines to Germany, and from 
September 21, when rubber was declared conditional 
contraband, the lines to adjacent neutrals had re- 
fused rubber that by any chance might be destined 
for Germany, out of fear that its presence on board 
would subject their ships to long detention by the 
British cruisers. 

After American manufacturers were prohibited 
from exporting to neutral countries except via Eng- 
land, lines to those countries refused to accept arti- 
cles with any rubber in their composition, even 
rejecting American exports of carpet sweepers and 
of the harmless necessary clothes wringer. 

The export of American automobiles and motor 
cycles to European neutrals was greatly hindered, 
because their tires were not allowed to go with them. 
A motor cycle for a customer in Sweden had to be 
shipped to him without tires. The American com- 
pany found it necessary to deliver the tires from 
stock in England, or to send the tires to its London 
agent with instructions to request a license for their 
shipment to the Swedish buyer. Whether the tires 
were allowed to be exported depended upon the state 
of mind of the duly authorized British official. If 



232 ECONOMIC ASPECTS OF THE WAR 

the official thought that the name of the Swedish 
buyer had a German sound — and most Scandinavian 
names have to British ears — he would refuse the tire 
license and the Swedish buyer would find himself with 
an automobile or a motor cycle for which he had no 
particular use. If he was wise, next time, he would 
order his motor cycle from England, whence the 
motor cycle would not be exported unless the tires 
were licensed to follow. The acquaintance of the 
British license officer with the British exporter gave 
the exporter the opportunity to explain that it was 
a racial and not necessarily a personal or business 
relationship between a gentleman in Gothenburg and 
a gentleman in Hamburg which made their names 
sound alike. 

Naturally, the market for rubber products which 
our manufacturers had built up in European neutral 
countries disappeared, excepting so far as the British 
would still allow us to supply that market through 
English agencies ; and for this loss an increase in our 
exports to the Allies could be hardly a legitimate 
compensation. 

On December 23 Great Britain declared rubber 
and its products absolute contraband. To be sure, 
this was practically no more effective than the ruling 
of September 21 which made such goods conditional 
contraband. But just as in the case of copper, 
placing rubber in the absolute contraband list was 
designed to "keep the record straight." 

Rubber is one of the items on the free list of the 
Declaration of London. That is, it is so necessary 



THE IMPORT SITUATION 233 

for the arts of peace, and has so little direct connec- 
tion with the uses of war, that nations are forbidden 
to hinder its movement to a belligerent. There is 
nothing in the use of rubber today that was not 
known in 1909; hence the reasons for listing it as a 
free article of commerce must still exist. 

And when one examines the connection of rubber 
with the operations of war, the justification for de- 
claring it contraband does not appear. One of the 
uses of rubber is for automobile tires. These tires 
may be used upon machines that are part of the 
military equipment of the enemy. Rubber, just as 
oils, hides and copper, should be free, listed accord- 
ing to the Declaration of London, an international 
code to which Great Britain was the leading con- 
tributor. 

As to Great Britain's course in restricting our re- 
export of rubber goods made from British materials, 
this embargo must be accepted as a necessary incident 
of war, on the ground that for Britain to allow such 
trade would be to allow an indirect form of "trading 
with the enemy." But for a system that prevents 
us from furnishing without hindrance rubber and 
rubber goods to European neutrals, and from fur- 
nishing to Germany Brazilian rubber and such prod- 
ucts as we can make from other than British ma- 
terials, there is no logical defense. 

As for the British measures exerting any pres- 
sure upon Germany which will influence the out- 
come or duration of the war, this is out of the ques- 
tion. Not even in England does anyone think of 



234 ECONOMIC ASPECTS OF THE WAR 

that. As usual, the pressure is being exerted upon a 
civil population, and upon the manufacturers in Ger- 
many and elsewhere by whom this population is sup- 
plied. At the outbreak of the war all tires in the em- 
pire are said to have been commandeered for the use 
of the military. Does anyone think that there were 
not enough tires in Germany to serve the military 
for an indefinite period? In a country with such an 
old and developed rubber industry there is a great 
store of old rubber which can be reclaimed and used. 
Finally, synthetic or artificial rubber is a fact, not 
an experiment. It cannot yet be produced so as to be 
a commercial competitor of natural rubber, but with 
the element of cost disregarded, it can be produced 
in large quantities. In the production of synthetic 
rubber for military purposes cost is not considered. 
So much for rubber. The history of wool is simi- 
lar. Of the wool which our manufacturers make 
into dress goods and manufactured clothing, we 
import more than we produce. Our imports fall 
into two divisions : Class I and Class II wool, which 
are the finer sorts used for clothing and blankets; 
and carpet wool. Carpet wool comes from China, 
Russia and Turkey. Russia and Turkey placed 
embargoes on the exportations of carpet wool but 
this resulted in no material embarrassment to our 
mills because by far our largest supply of this wool 
is from China and our trade with that country was 
not disturbed. Our difficulties were concerned chiefly 
with the better classes of wool, of which we obtain 



THE IMPORT SITUATION 235 

normally about 60 per cent from the British empire, 
and the rest mostly from South America. 

The war came at an opportune time for the woolen 
manufacturers. The Underwood-Simmons tariff law 
had placed raw wool on the free list on December 1, 
1913, and there were large importations of foreign 
wool up to the time that the war began. From 
December 1, 1913, to August 1, 1914, we received 
35,000,000 pounds more of raw wool than in the same 
period of the preceding year. At the opening of 
the war there was a considerable supply of wool 
afloat for this country or contracted to be delivered 
here, so until the end of October the wool receipts 
continued in large volume. 

But with the opening of the wool auction sales in 
London, early in October, Great Britain announced 
an embargo on wool exports from the United King- 
dom. The wool trade was not alarmed, assuming 
that the imports from Australia and New Zealand 
would not be affected. Anxiety began to be felt, 
however, when despatches from Washington early in 
November announced that Australia and New Zea- 
land had imposed embargoes on wool exports ; and it 
was asserted that England had forbidden British 
vessels to carry South American wool to the United 
States. As a result of these factors, our receipts of 
wool declined in November and fell to a very low 
level in December. They did not reach their normal 
volume again until March, after the February agree- 
ment of our importers with the British Government. 
That we were allowed to get as much wool as we did 



236 ECONOMIC ASPECTS OF THE WAR 

in those winter months was due partly to the clamor 
of the Australians at being deprived of their cus- 
tomary American market. Some shipments of Aus- 
tralian merino wool moved forward under temporary 
licenses granted American firms; but nobody knew 
how long the system would last, or what there might 
be in the future. 

The difficulty in the negotiations between the 
American woolen manufacturers and the British 
Government arose from the nature of the required 
guaranty, namely, that the wool would not reach 
Germany in any way or form. Americans consid- 
ered it impracticable and unfair to be asked to put 
up a bond supporting such a guarantee, because of 
the numerous stages and the many hands through 
which the wool must pass in its progress to the 
ultimate user. Meantime, the woolen manufacturers 
complained that the Allies were overwhelming them 
with war orders and were not letting enough wool 
supplies come forward to make the filling of those 
orders possible. 

The Textile Alliance comprises the four leading 
textile associations in America and was originally 
formed to correct certain abuses connected with the 
purchase of mill supplies. It was through this 
organization that the plan was eventually worked 
out which allowed wool to come forward. 

Under this plan a license to receive wool in Amer- 
ica could be had by an American only after approval 
of the purchaser by the Textile Alliance, acting 
through its president, A. M. Patterson. Theoreti- 



THE IMPORT SITUATION 237 

cally, it was possible to apply to London direct for a 
license, but the British Government let it be under- 
stood with quite sufficient distinctness that it would 
grant no license not approved by the Alliance. 

The plan required that a separate application 
must be made for each shipment. The application 
was to be forwarded by Mr. Patterson to the British 
authorities. If the wool was to be shipped to an 
American, he must sign a non-export guarantee 
before delivery could be had. All imported wool, it 
was provided, must be consigned to Mr. Patterson 
or to one of a group of banks approved by the Brit- 
ish Government. The banks, however, could release 
the wool only upon written word from Mr. Patterson. 

The Textile Alliance, in explaining the plan to the 
wool trade, stated that it had assumed strong moral 
obligations towards the British Board of Trade, to 
discourage by every lawful means the export of wool, 
tops or yarns from the United States. If such 
exportation occurred it would be considered by Eng- 
land as prima facie evidence that the United States 
was supplied with more than enough wool for its 
own use, and the imports would be restricted by the 
British Government. Therefore all wool users and 
•dealers were urged to refrain from such action. That 
is, even wool raised in Montana might not be ex- 
ported without bringing upon this country a British 
embargo on wool from Australasia, and possibly 
other measures that would shut us off from supplies 
from South America in British ships. 

In addition to the measures already reviewed, the 



238 ECONOMIC ASPECTS OF THE WAR 

export of wool products to Germany was prevented, 
and export to adjacent neutrals hindered by Great 
Britain's August 4 contraband lists, and the treat- 
ment which the August 20 Order in Council pre- 
scribed for conditional contraband. Blankets were 
listed as absolute contraband in the August 4 lists; 
woolen clothing was absolute when of obviously mili- 
tary nature, and otherwise conditional. This policy 
reached its full effectiveness on March 11, when raw 
wool, wool tops and noils and woolen and worsted 
yarns were suddenly made absolute contraband. 
Again, in the making of raw wool contraband, the 
situation arose of Britain forbidding us to trade 
with Germany in innocent American products, neces- 
sary for the German civilian population. Wool was 
on the free list of the Declaration of London. 

The measures taken regarding wool and rubber 
were paralleled by those regarding tin. Tin comes 
from England and the Straits Settlements. All of 
it now comes through London. After a period of 
complete embargo, we were allowed to import the 
metal under license, with a guarantee that tin and 
its products would be sold only to our own country 
and the Allies. 



CHAPTER XIII 

The Import Situation (Continued) 

Passing from commodities imported largely from 
British possessions, it is of interest to consider the 
effect of the war as to articles for which our great 
source of supply is Germany, notably potash and 
dyestuffs. 

One of the most important and necessary of our 
imports is potash, in which Germany has a monop- 
oly of the world's supply. Potash is an essential 
ingredient of commercial fertilizer, which becomes 
increasingly necessary for soils that have been 
worked long and have had extracted from them, by 
the growing crops, important chemical properties. 
Our use of fertilizer is naturally most extended in 
the older parts of the country, especially in the 
southeastern cotton states where the land has been 
tilled without interruption for a century. 

Commercial fertilizer is compounded of phosphoric 
acid, lime, nitrogen and potash. All the necessary 
elements are present and readily available in this 
country, except potash. We import from Germany 
1,000,000 tons annually of salts with various per- 
centages of potash, containing about 240,000 tons 
of the pure chemical. In normal times this mate- 
rial is used principally in making fertilizer, though 



240 ECONOMIC ASPECTS OF THE WAR 

it is also employed in making various chemical 
products, among them gunpowder. 

The war came at a bad time for the fertilizer 
manufacturers in this country. The annual supply 
of potash from the German Syndicate comes in eight 
installments, running from May to December. The 
manufacturers ask for small installments during the 
early months, as they do not begin to ship the ferti- 
lizer until the following February, and large takings 
in the early months mean a corresponding tying up 
of money during the summer and. fall. Hence, on 
August 1, 1914, little had been shipped to us. 

At the outbreak of the war Germany declared an 
embargo on the export of muriate of potash, the 
sort used in gunpowder. This restriction lasted only 
five or six weeks, but its relaxation was not followed 
by large imports, owing to difficulties in arranging 
payments, lack of transportation, and shortage of 
labor at the German mines. 

Potash comes from the Potash Syndicate. The 
contracts under which our manufacturers had been 
supplied contained a war clause, and so had become 
invalid. 

The Syndicate offered, however, to continue ship- 
ping at contract prices if the Americans would 
carry part of the higher cost of delivering potash 
in America. The higher cost consisted of a larger 
inland freight rate — from the mines to Rotterdam, 
since the German ports were closed — a higher ocean 
rate and war risk insurance. The Syndicate offered 
to carry the higher ocean rate, if the Americans paid 



THE IMPORT SITUATION 241 

the higher inland rate and assumed the war risk 
insurance. The effect was to make potash cost us 
only $4 per ton more than before; which meant 
for muriate, for example, a price of $37.50, instead 
of $33.50 per ton delivered. 

Under these conditions potash was brought to 
this country, subject only to the limitation imposed 
by scarcity of ocean tonnage, until at the end of 
January Germany forbade its further export. Yet 
it had never moved freely. Only in January and 
February did our receipts equal as much as one- 
quarter of the corresponding receipts in the pre- 
vious year. In October, because the German rail- 
roads had been largely used for military purposes in 
August and September, we received only 1,800 tons 
of potash compared with 92,000 tons in October, 
1913. 

The German Government ostensibly looked with 
increasing concern upon the amount of muriate of 
potash being used in this country for exportation 
to England as pure gunpowder, or as gunpowder in 
ammunition; and therefore, on January 29, declared 
an absolute embargo on the export of all potash 
salts. 

The British blockade action on March 1 showed 
that England was prepared to stop potash or any- 
thing else from Germany. Against our receiving 
further shipments there was apparently a double 
bar. 

It so happened, however, that at the beginning of 
the war there were three cargoes of potash in Ham- 



242 ECONOMIC ASPECTS OF THE WAR 

burg: two in ships of British registry, one in a 
German ship. With the outbreak of the war these 
vessels were tied up in port. The German boat could 
not venture out for fear of capture; the English 
boats were detained by the Hamburg authorities. 
These cargoes had been bought before the beginning 
of the war. In March, after the British Order in 
Council, potash in this country was very scarce; so 
the users urged the State Department to obtain from 
Britain permission for these cargoes to be barged 
from Hamburg to Rotterdam and there put on ships 
for America. It was explained to London that these 
goods, like other imports allowed to pass in March, 
had been bought before the Order in Council went 
into effect. 

In April, after long negotiations, Great Britain's 
permission was obtained. It was agreed that potash 
on its way to Rotterdam and America should not be 
molested. In America, provision was made for super- 
vising the distribution of this potash by a govern- 
ment official, to assure the German authorities that it 
would reach only fertilizer factories and chemical 
manufacturers, who would put it to other use than 
the making of explosives. 

Though apparently suspicious as to the possi- 
bility of keeping muriate away from American 
powder manufacturers, who were willing to pay high 
prices for it, Germany agreed to let the potash go 
to Rotterdam and be exported thence, on condition 
that we would send three American ships, loaded 
with cotton, to take it away. This our government 



THE IMPORT SITUATION 243 

declared itself unable to do, in view of conflict with 
the British blockade Order. 

The result was that the potash was still withheld. 
Because we would not send Germany the things she 
wanted, that country in effect set out to deny us the 
things we wanted. She apparently was looking for 
a pressure which would make us feel the inconven- 
ience as keenly as we felt the illegality of the British 
blockade. The withholding of potash as a measure 
of pressure against us was no doubt the real reason 
for the January 29 embargo, rather than any hope 
of crippling our exports of explosives by that action. 
Potash is not used for smokeless powder. 

As a result of these conditions the use of fertilizer 
in this country for the agricultural season of 1915 
was greatly curtailed. This was especially true of 
the cotton states, where a reduction of 40 to 50 
per cent was reported. Such fertilizer as was used 
contained less potash than usual. The effect on the 
cotton crop may not be noticeably great for the year 
1915 ; but if the war continues and in 1916 no more 
potash is available than this year, the results, 
according to agricultural experts, will be very 
marked. 

Apparently the resumption of our potash imports 
is dependent upon the successful assertion of our 
right to ship our products to Germany. It may be 
an additional incentive for us to start the movement 
of cotton to Germany, if that movement is the price 
we must pay for potash to raise more cotton. 

We Americans are fond of saying that we are a 



244 ECONOMIC ASPECTS OF THE WAR 

self-sufficient nation, independent of the world. We 
raise everything we need. No one can hurt us, we 
say, for we are a complete world in ourselves. The 
war will serve to awaken us from this self-hypnotism. 
Of some products, such as cotton, we raise a great 
deal more than we need, and a war that cuts off our 
exports brings us distress. Of some vital products 
like potash we produce less than we need, or none at 
all; and war cuts us off from the necessary raw 
material. We suffer as to potash because German 
mines have a monopoly of the supply. We suffer 
as to dyestuffs because German industry has created 
a practical monopoly of their production. 

In olden days our textile manufacturers did their 
coloring with vegetable or animal products from 
such sources as logwood or the cochineal bug. These 
natural dyes have been displaced by synthetic dyes 
which are derived from coal-tar. We have no longer 
the apparatus and trained men for making and 
applying the old natural dyes. And the development 
of the synthetic dyes, their manufacture on a vast 
scale and the supplying of them to the rest of 
the world, have been an achievement of industrial 
Germany. 

The manufacture of coal-tar dyes is complex. By 
distilling coal-tar ten products called crudes are 
produced. By treating these crudes with non-coal- 
tar products, like acid and gases, 300 intermediates 
are produced. These intermediates are assembled or 
combined to form, all told, some 900 finished dyes, of 
which a considerable proportion are in use in the 



THE IMPORT SITUATION 245 

United States. It is as if ten fibers were used to 
make 300 yarns, these in turn being woven into 900 
patterns. 

There are several reasons why no dyestuff indus- 
try has developed in America. One difficulty is in 
the production of intermediates. The making of 
some of these is a process kept secret or patented by 
the Germans. In the case of others, by-products are 
developed for which the Germans alone have found 
a Use and a market. The German industry is largely 
in the hands of four great concerns which produce 
all of the intermediates and finished dyes, and use all 
of the by-products. To compete with such indus- 
tries, it would be necessary to operate upon the same 
scale. Some of the intermediates and finished dyes 
could not be made in this country until secret pro- 
cesses were discovered or until the expiration of Ger- 
man patents. We could not operate with efficiency 
until we had trained the thousands of chemists who 
watch over every division and subdivision of the dye- 
making process in Germany. 

While the shortage of dyestuffs has given some 
stimulus to the industry in this country, it is a peril- 
ous business to embark upon the manufacture of 
dyes for the war period alone, only to encounter dis- 
astrous competition with the lower-cost German 
product upon the return of peace. The develop- 
ment of a real dyestuff industry in America would 
be a slow matter at best, but even much of a begin- 
ning is dependent largely upon a heavy protective 
duty and perhaps a change in our laws to prevent 



246 ECONOMIC ASPECTS OF THE WAR 

foreigners from dumping their products here at 
famine prices after the war. An increased protective 
duty would be opposed by many of the manufacturers 
who use dyestuffs. It would be unfavorably received, 
at present, by the American public and be out of line 
with the policy of a Democratic administration. 

There are a few dyestuff plants in America, but 
these have been employed largely on intermediates 
imported from Germany. To solve the problem of 
war shortage they can help but little. It is vain to 
say that we have the largest supplies of raw mate- 
rial for dyes in the world. It is true that by col- 
lecting the great quantities of coal-tar which we 
could collect from our enormous coking industry, we 
could produce more of this material than anyone else. 
But the problem is to make the intermediates. It is 
a problem of processes, patents, trained men, organi- 
zation and markets. To meet the war situation there 
is no prospect of American substitutes taking the 
place of German dyes ; the difficulty that confronts 
dye users must be solved by regaining the German 
supply. 

At the outbreak of the war Germany put an 
embargo on the export of dyestuffs, but in the latter 
part of August shipments were allowed to come 
forward to the United States via Rotterdam. Be- 
fore the end of September, however, German consu- 
lar agents here reported to their home office that we 
were shipping dyes to England. This seems indeed 
to have been the case, though the extent of such 
direct re-exports was small. For the nine months 



THE IMPORT SITUATION 247 

ending March 81, 1915, we re-exported to England 
$54,000 of dyes or dyestuffs, compared with $23,000 
in the same months of the year before. More impor- 
tant than this, the export of American dyes increased 
from $244,000 in 1913-1914 to $538,000 in 1914- 
1915. These American dyes are largely made from 
imported German intermediates, and hence may be 
looked upon mostly as re-exports of German dyes to 
England. The figures given show only the declared 
movement of dyes from here to England, and do not 
indicate a movement which is said to have occurred 
under false declaration of the contents of shipments. 
Whatever the actual extent of the re-exports, they 
occurred in spite of obligation assumed by those who 
imported dyes, not to reship them to England. 

Since England is as dependent as we are upon the 
importation of German dyes, Germany was bending 
every effort to keep her products from England, and 
so to bring pressure to bear upon the dyeing indus- 
try in England and upon the people employed. It 
was the same game- that England was playing with 
rubber. After the discovery of the movement of 
dyes from here to Great Britain, already apparent 
in September, the German relaxation of the dye 
export embargo, when it did come, was so arranged 
that American manufacturers said it was designed to 
keep our industries in a chronic state of "dyestuff 
hunger," in order to prevent us from re-exporting. 
Our embarrassment was, in fact, probably due to 
another cause. From July, 1914, to the end of 
March, 1915, we received $1,700,000 more of dyes 



248 ECONOMIC ASPECTS OF THE WAR 

and dyestuffs than in the same months of the pre- 
vious year. To be sure, prices were higher, and this 
accounted for part of the increase in the value of 
imports. Yet the quantity imported was heavy and 
apparently sufficient. There was no marked in- 
crease in the home demand for dyes. So, if, in spite 
of large imports, our industries were in a "chronic 
state of dyestuff hunger," it was either because the 
supplies were held off the market by speculators or 
sent across to England. 

When negotiations took place with the German 
Government, in early October, 1914, to induce Berlin 
to allow dyes to be shipped to us, the German authori- 
ties insisted in return that the dyes should be called 
for by American ships and that these ships should 
bring cotton, or something equally desired, to Ger- 
many. This demand had much to do with the start- 
ing of direct shipments of cotton to Germany, and 
the use of American boats therefor. American ves- 
sels were insisted upon, because it was assumed that 
England would be less likely to stop our returning 
ships, and requisition their desirable dyestuffs cargo, 
than it would be in the case of ships carrying a less 
imposing neutral flag. 

By a mistake which was probably due to exces- 
sive timidity, the Matanzas, the first American 
steamer that went over for dyes (in October), left 
America in ballast. The German Government never- 
theless allowed the boat to bring back a cargo of 
dyes. The Matanzas arrived with her first cargo 
on November 15, brought another in January and 



THE IMPORT SITUATION 249 

a third in March. In the meantime, other American 
boats sailed with cotton, some of them direct to the 
German ports. Dyestuffs were sent to us theoreti- 
cally in an amount equal to our average monthly 
receipts in recent years ; practically we received more 
than this average. Shipments came to this country 
in good volume until the British Order in Council, 
announced March 1, shut off all movement to and 
from Germany. The Order in Council, above all 
else, stopped the movement of our cotton; and it 
was in return for our cotton shipments that the dyes 
had been sent to us. 

On March 23, the steamer George E. Warren 
arrived in New York with a large cargo of dyestuffs 
and at about the same time the Matanzas came with 
her last load. The skipper of the Warren said that 
his were the last German dyestuffs that would reach 
us until after the war, and until the present writing 
(August) his prediction has proved practically 
true. American vessels which were in Bremen on 
March 1 loading dyes and other German exports, 
received the announcement of the British Order in 
Council and at once discharged what they had loaded 
and came back to America empty. The American 
steamers were afraid to sail with goods in the face 
of the Order in Council, and the shippers were afraid 
to ship, in view of the danger of detention or con- 
fiscation of their shipments. Moreover, the Germans, 
who were doing everything possible to keep dyestuffs 
out of the hands of Britain, were unwilling to let 
dyestuffs be exported while a British Order was in 



250 ECONOMIC ASPECTS OF THE WAR 

effect which allowed one of His Majesty's cruisers to 
take into a British port any cargo from Germany, 
unload it there and sell it in the British market. 

When the shipment of dyestuffs ceased, Americans 
who were interested began to appeal to Washington. 
Congressman Herman Metz of New York sent out 
letters of inquiry to about 1,000 users of imported 
dyes: manufacturers of textiles, leather, paper, wall 
paper, colors and printing inks. Replies from 270, 
he said, indicated that about 250,000 employees 
would be affected by an interruption of dye imports. 
He estimated that the total number of workers 
affected directly and indirectly would be not under 
2,000,000. Whether or not such figures were too 
large, it was certain that the threatened effects were 
serious. To some extent it was possible to substi- 
tute white goods for colored, but even that meant 
deprivation of employment for those ordinarily 
engaged in the coloring process. 

In April it was estimated that the supplies of dye- 
stuffs in the country would take care of our demands 
until July 31. The pressure brought to bear at 
Washington was strong. The British Government 
perhaps shunned the odium of bringing disaster upon 
dyestuff users ; moreover it was not in a good posi- 
tion to resist the pressure. England had declared 
herself willing to allow the export of cotton which 
had been contracted for before March 1. She was 
now asked to allow the importation from Germany 
of dyestuffs under similar terms. Such a concession 
was suggested not only by her own policy with regard 



THE IMPORT SITUATION 251 

to exports, but also by her own interests as a dye- 
stuff user, for experience had taught her that she 
could buy German dyes that reached America. 

So in the middle of April a London representative 
of the Textile Alliance obtained from England a free 
passage from Rotterdam for two cargoes of dyes, 
consisting of goods said to have been purchased 
before March 1. The dyes were to be consigned to 
Secretary Redfield of the Department of Commerce, 
and by him distributed to the members of the Textile 
Alliance. Many in this country were dissatisfied 
with the arrangement, because the membership of the 
Textile Alliance by no means comprises all those 
entitled to receive dyes. The German Government 
was dissatisfied, and refused to let the dyes come for- 
ward under such an arrangement. Berlin is said to 
have claimed that the dyes must move not by the 
grace of England, as an extraordinary shipment, but 
by right of the United States as a part of the free 
commerce with Germany which was being illegally 
obstructed by England. The dyes in question did 
not come forward. 

All this meant, in plain English, that Germany was 
determined to hold up our supplies of dyestuffs unti] 
we re-established regular communication with her; 
to keep from us something that we wanted until, in 
accordance with what we claimed as our clear rights, 
we should begin to send our goods to her. It was 
believed that dyes were a more powerful inducement 
to us than potash, for we could see in the immediate 
future the result of a dye shortage, whereas the 



252 ECONOMIC ASPECTS OF THE WAR 

result of a potash famine probably would not be fully 
felt until the gathering of the 1916 crops. 

As in the case of potash, so with dyes, we cannot 
say that Britain was directly responsible for the 
threatened shortage. Britain was willing to allow 
us to bring a small quantity of both potash and 
dyes through the blockade. But Britain must be 
held responsible for the sudden stoppage, on March 
1, of all commerce between us and Germany, a com- 
merce of which potash and dyestuffs form an insepa- 
rable part. 

With regard to the stoppage of imports from Ger- 
many other than dyes and potash, the British Gov- 
ernment bears the full responsibility. These imports 
are normally very large and serve a wide range of 
manufacturers, dealers and consumers. They include 
hides, skins and furs, toys, crockery, linens, hosiery, 
laces, woolen and silk goods and gloves. 

It has been noted above that when the March 11 
Order was promulgated, all American boats loading 
German goods discharged what they had loaded and 
came home. Moreover, the lines of steamers from 
European neutral ports gave notice that hence- 
forth no goods of German or Austrian ownership or 
origin would be accepted for transportation, and 
discharged whatever goods of this nature they had 
aboard. Such lines included the Holland- American, 
Scandinavian- American, Swedish- American and Nor- 
wegian-American. Their refusal to bring any more 
goods was natural, since their doing so would expose 
them to detention and to whatever penalty His 



THE IMPORT SITUATION 253 

Majesty's Government might choose to impose for 
disobeying the British Order. 

This Order decreed that no vessels sailing from a 
German port after March 1 should be allowed to 
proceed. All goods aboard must be discharged in a 
British or Allied port. If discharged in a British 
port, the goods were to be turned over to the marshal 
of the prize court, and, if not requisitioned for the 
use of His Majesty, they should be detained or sold 
under the court's direction, the proceeds of such sale 
to be dealt with as the court deemed just. However, 
no money should be paid over by the court before 
the conclusion of peace, unless it were shown that the 
goods became neutral property before the issue of the 
Order. "The proper officer of the crown" was 
authorized to modify this last provision, and also 
to authorize the release of neutral property laden at 
a German port. 

The provisions of the Order thus far cited affected 
shipments direct from Germany. Further provi- 
sions concerned shipments of German goods via 
neutrals. Any vessel sailing after March 1 from a 
neutral European port with goods of German 
ownership or origin, was similarly to be stopped and 
required to discharge its cargo. If the goods were 
not requisitioned by the British Government, they 
might be sold and the proceeds paid to the court. 
The court, however, was not to pay over any of these 
proceeds until after the conclusion of the peace, 
unless it were shown that the goods became neutral 
property before March 1. The "proper officer of 



254 ECONOMIC ASPECTS OF THE WAR 

the crown" was empowered also in this case to 
release neutral property of enemy origin. 

It is recalled that we protested with vigor against 
this tie-up of exports from Germany to this coun- 
try, in our note of March 30 directed against the 
Order in Council. We asserted the 

"rule sanctioned by general practice, that even 
though a blockade should exist and the doctrine of 
contraband as to unblockaded territory be rigidly 
enforced, innocent shipments may be freely sent to 
and from the United States through neutral coun- 
tries to belligerent territory without being subject 
to the penalties of contraband traffic or breach of 
blockade, much less to detention, requisition, or 
confiscation." 

That is, we denied the right of Britain, even if she 
were maintaining a blockade of Germany, to stop 
the movement of German traffic to us through 
neutral countries adjacent to Germany. 

This communication, as shown elsewhere, was not 
answered until the end of July. By a series of 
events, however, the original decree was somewhat 
modified. 

It is recalled that the English Government first 
modified its Order by allowing us to export through 
neutral countries, until March 31, cotton which we 
had sold to Germany before the first of that month. 
The cargoes were to be allowed to proceed, or else 
bought at contract prices. It was natural for 
Britain to grant American importers a similar modi- 
fication of the Order so far as it affected westbound 



THE IMPORT SITUATION 255 

traffic ; namely, to allow us to receive goods which had 
been paid for before March 1. The object of the 
westbound blockade being to deprive Germany of 
the opportunity to make profits by exporting, there 
was no insuperable objection to letting those exports 
come forward for which Germany had already been 
paid, and whose detention would injure only the 
American buyers. 

This was the nature of the British modification. 
The period during which such goods might be 
brought out of Germany was twice extended, but the 
principle was adhered to that nothing should go 
forward which had not been paid for before March 1. 

The efforts of Washington to help importers with- 
out compromising the government on legal questions 
resulted in a curious official complication. Although 
our State Department never recognized the legality 
of the blockade, two of its officials, its Foreign Trade 
Advisers, were deputized to act as representatives of 
American shippers in presenting to the British 
Embassy at Washington proofs that their desired 
imports from Germany were paid for before March 
1. It was specifically stated that these Advisers did 
not officially represent the government, and that 
nothing they might do could legally bind their supe- 
riors. Yet they were government officials, and they 
were acting with the British Embassy in its method 
of enforcing what their Department said was an 
illegal stoppage of our commerce.* 

* The situation could have been paralleled with regard to 
our attitude towards Germany. We protested the sinking of 



256 ECONOMIC ASPECTS OF THE WAR 

Early in April the Foreign Trade Advisers re- 
ceived a note from the British Embassy at Wash- 
ington, containing the following: 

"The British Embassy are authorized to state that 
in cases where a merchant vessel sails from a port 
other than a German port, carrying goods of enemy 
origin for which American importers claim to have 
made payment prior to March 1, 1915, proof that 
such goods were paid for before March 1 may be 
submitted for examination to the Embassy. If such 
proofs are presented at a sufficiently early stage to 
enable the report thereon to be communicated in time 
to the British authorities, the result of the investi- 
gations will be taken into account and due weight 
attached to them in deciding whether the goods con- 
cerned should be discharged under the provisions of 
Article 4 of the Order in Council of March 11." 

The Foreign Trade Advisers sent to importers a 
statement containing this note and a list of the 
documents or affidavits which would be considered as 
evidence by the British Embassy.* Proofs were 
afterward submitted as fast as received. 

However, perhaps greater relief was afforded else- 
where. The British Government saw that it must 
not cut off short all commerce from Germany to the 
United States. So it appointed the Holland- Ameri- 

passenger vessels with Americans aboard. After doing that, 
we might have appointed two Foreign Travel Advisers, 
attached to the State Department, whose function would have 
been to inform prospective travelers what ships the German 
Ambassador, on behalf of his government, would agree not to 
torpedo. 

* For this circular of the Foreign Trade Advisers, see 
Appendix, p. 327. 



THE IMPORT SITUATION 257 

can Line as the route for such traffic as might be 
allowed to move. The Holland- American Line is the 
one most amenable to England, because of necessity 
it runs through the Channel and is at the mercy of 
British cruisers. This line was allowed to issue a 
notice that upon certain conditions it would accept 
German and Austrian goods after March 1. The con- 
ditions were that the goods should be of American 
ownership, and should have been paid for before the 
first of March. Moreover, this fact had to be sworn 
to before an American consul in Germany, and cer- 
tified by him. It was not simply a question of attest- 
ing an oath; the consul must certify the fact. 

Under this arrangement there was no doubt that 
American consuls gave their certification in some 
cases where nothing but ownership had changed 
hands before March 1 ; that is, where an order had 
been given but no payment had been made. If the 
British requirement had been strictly met, few goods 
would have come out of Germany after the first of 
March. The very important reason for this was the 
fact that imports are not generally paid for before 
they are shipped. In the case of 90 per cent of them 
a bill is drawn by the seller on the buyer, or his 
banker, at the time the goods are shipped. This 
draft does not become payable — i.e., the goods are 
not paid for — until at least 30 days later. One of 
the largest import firms in New York had placed 
heavy orders in Germany, but on March 1 had only 
ten cases of goods in that country for which it had 
actually paid. 



258 ECONOMIC ASPECTS OF THE WAR 

Probably because of this freedom with which the 
American consuls interpreted the circular of the 
Holland- American Line, the British Government 
caused the company to require the certification of 
the Netherlands Oversea Trust in addition to that of 
the American consul. During May the United 
States Government notified its consuls that they had 
no authority to certify, but merely to attest the 
oaths of others. 

The time limit within which German goods could 
be taken from Rotterdam was extended to June 1, 
and then to June 15. It was definitely announced 
that after June 15, nothing more would be certified 
by the Netherlands Oversea Trust, and hence noth- 
ing more would be accepted by the Holland- American 
Line. On July 1 the Foreign Trade Advisers notified 
our importers that on June 15 the British Govern- 
ment had ceased issuing permits for the importation 
of German goods into America. 

This final announcement, which had cast its shadow 
before it, stirred the New York importers of general 
merchandise to action. They met in New York on 
June 10 and thence some of them proceeded to Wash- 
ington. They claimed that before March 1 they had 
ordered over $50,000,000 of merchandise for the fall 
trade. German manufacturers had proceeded with 
these orders, and the American buyers would have 
to pay for them.* In opposition to this view it was 

* Moreover, these goods have been sold to American re- 
tailers who may take measures against the importers for failure 
to deliver. 



THE IMPORT SITUATION 259 

asserted by the British that ample time had been 
given to get all legitimate and bona fide purchases 
out of Germany. In the case of orders placed after 
August 1, 1914, when war began, ordinary business 
prudence — the British said — must have caused the 
buyers to have in their contracts war clauses absolv- 
ing them from liability in cases such as this. — That 
may be doubted. Nobody foresaw, until shortly 
before March 1, an attempt to blockade even Ger- 
man ports. A policy that forbade German shipments 
through neutral ports was undreamed of. 

However this may be, our importers seem entitled 
to protection, whether they should have foreseen the 
British action or not. Their business is an estab- 
lished trade in German goods, upon which our manu- 
facturers and our people have become dependent. 
The livelihood of the dealers, the prosperity of manu- 
facturers and the comfort of many people are con- 
ditioned upon a continuance of this trade. 

Further, in this as in many other matters arising 
from the European War, it is a question of more than 
our right. If we continue to trade with England and 
allow our trade with Germany to be stifled, we violate 
an obligation of neutrality. We can no more rightly 
refuse to buy from one belligerent and not from 
another than we can rightly refuse to sell to one 
belligerent while continuing to sell to another. Fail- 
ing to enforce our neutral right to trade with Ger- 
many is not in strict terms a refusal to trade; yet 
the principle is as true today as when clearly stated 
by Jefferson, that between restraining commerce our- 



260 ECONOMIC ASPECTS OF THE WAR 

selves and allowing belligerent countries to restrain 
it there is no difference. 

On July 23, as we saw in Chapter VI, the British 
answered with a complete refusal our protest of 
March 30 against the blockade. The essence of its 
contention was necessity, and the application of the 
inapplicable Civil War cases. 

In addition to this general denial of our conten- 
tions, we received a specific denial. On July 15 we 
protested against the seizure and continued deten- 
tion of the Belgian cargo of the American steamer 
Neches. 

In our July 15 note, the issue was first stated. 
The American steamer Neches with a general cargo 
sailed from Rotterdam for the United States. She 
was held up at the Downs, taken to London and 
compelled to discharge goods which belonged to 
American citizens. The British had justified the 
seizure on the ground of the March 11 Order in 
Council, prohibiting German commerce from moving 
via neutral ports. (The Neches cargo was of Bel- 
gian origin and as Belgium was in German hands 
this was considered as German commerce.) 

Our note stated that we considered the Neches 
case an illustration of the international invalidity of 
the March 11 Order in Council. We declared illegal 
the seizure of goods from a neutral port merely be- 
cause they originated with an enemy of Great Brit- 
ain. Our Ambassador was requested to communicate 
to England our desire that goods on the Neches, the 



THE IMPORT SITUATION 261 

property of American citizens, be expeditiously re- 
leased and forwarded to destination. 

The unsatisfactory British answer was sent on 
July 31. With regard to what Britain considered its 
legal rights, this note referred us back to the British 
communication of July 23. Our attention was called 
to the inhumanity of Germany's submarine warfare 
on merchant vessels and it was asserted that this 
contrasted with the humane British procedure with 
regard to vessels seized. It was stated that Britain 
was unaware, except for the published correspond- 
ence of America and Germany, to what extent neu- 
trals had demanded damages for the unlawful acts 
of submarines. So long as this German warfare con- 
tinued, the note went on, Britain could hardly be 
expected to abandon her rights and allow goods of 
German origin to pass freely through waters 
patrolled by British cruisers. 

However, it was stated that in particular cases of 
hardship in neutral countries England was willing 
to examine the facts with a spirit of consideration 
for the interests of neutrals. England declared her- 
self willing so to proceed, if the Neches were held 
to be such a special case. 

In preventing a stoppage of imports our govern- 
ment has an especial interest, because customs duties 
furnish the largest single item of our national reve- 
nue. In recent years we have collected each year 
approximately $700,000,000 in the form of taxes, 
nearly one-half of this sum, about $300,000,000, 
being duties levied on imported goods. German 



262 ECONOMIC ASPECTS OF THE WAR 

goods are, as a rule, manufactures ; they are thus 
subject to duty and are sources of revenue to the 
Federal Government. In the last four years Ger- 
many has furnished 10^ per cent of all of our 
imports. She has furnished 14^ V er cen t °f our 
imports subject to duty. 

Precisely how much revenue is collected upon im- 
ports from Germany it is impossible to say. The 
statistics of the customs service are not kept in such 
a manner as to show import revenues by countries, 
nor can the figures be so combined as to produce this 
result. However, it is possible to get a fairly close 
estimate of the amount so collected. 

We know our total imports from Germany, and 
we know the value of our imports of a certain num- 
ber of the leading articles in this trade, thirteen in 
all, some of them dutiable and some of them free. 
In the calendar years 1912, 1913 and 1914 these 
specified articles represented one-half of all imports 
from Germany. The average rate of duty applicable 
to these goods was 25 per cent in 1912, and 26 per 
cent in 1913 and 1914. It is a fair assumption that 
the average duty we collect on all German imports is 
25 per cent. Before the war we were importing from 
Germany at the rate of $120,000,000 per year. A 
25 per cent duty on this amount would yield us an 
annual revenue of $30,000,000. In reality we prob- 
ably collect more than this. Germany sends us 141^ 
per cent of all the dutiable goods that we import. If 
these goods pay the average rate of duty they would 
yield 14^ per cent of the total we collect. That 



THE IMPORT SITUATION 263 

total is over $300,000,000 per year. So the Ger- 
man imports would contribute over $45,000,000. 
The true amount lies somewhere between the esti- 
mates of $30,000,000 and $45,000,000. 

It may be objected that imports from Germany 
would in any case have fallen off during the war, and 
that our revenues from these imports would inevit- 
ably have decreased even if Britain did not interfere 
with our trade. In a degree, that is true. In the 
eight months ending March 1, when the Order in 
Council went into effect, we imported $76,000,000 of 
goods from Germany, compared with $127,000,000 
in the same period of the previous year. That is, our 
imports were 60 per cent of normal. Presumably 
we were collecting that proportion of the normal 
amount of duties or at the rate of $20,000,000 per 
year on German goods. 

But with an absolute stoppage of German imports, 
our revenues will decline from $20,000,000 to noth- 
ing. And this $20,000,000 is a sum whose prospec- 
tive disappearance has concerned those in the Federal 
Government who must take care of our revenue. No 
one will be popular who suggests taxes to meet a 
$20,000,000 deficit, which is the contribution England 
demands that our government should pay towards the 
enforcement of a non-intercourse policy, though that 
policy, we officially contend, violates our rights and 
our neutrality. 



CHAPTER XIV 

The Practicability of Starving Germany 

A sentiment has existed among many people, not 
excessively partisan in their views as to the general 
merits of the war, in favor of allowing England a 
free hand in the treatment of commerce for Germany. 
They feel that a policy on the part of Great Britain 
which would tend to end the struggle quickly by 
bringing to bear upon Germany not only the force of 
heavy military odds but also the force of severe eco- 
nomic pressure ought, perhaps, to meet the approval 
of neutral countries, even though these countries 
might suffer in their own material interests. 

This point of view is expressed in an editorial of 
the New York Journal of Commerce of March 2, 
the day after the British announced their ban on our 
trade with Germany. 

"If it is in the power of the Allies to keep from 
Germany the supplies which would enable it to main- 
tain its hostile operations against them indefinitely, 
whether these supplies are intended for the direct 
support of armies or to replace those taken for their 
support from such as would otherwise sustain the 
civil population, that may be the most effective and 
humane means of shortening the ruthless process of 
slaughter, desolation and misery, the destruction of 



STARVING GERMANY 265 

all manner of values and the huge losses which neutral 
nations cannot escape sharing. 

"All can afford to share in the cost and the sacri- 
fice to secure this consummation as speedily and 
effectively as possible." 

In the discussion of Great Britain's action with 
respect to cotton, and also as to copper, some atten- 
tion was given to the practical effect of the British 
policy in bringing to bear upon Germany pressure 
which might shorten the war. It was seen that in 
neither case was there any considerable probability of 
such a result. 

It is now proposed to consider further the effi- 
ciency of England's "attrition" measures, especially 
with regard to foodstuffs. It will be instructive to 
note the resourcefulness with which Germany has 
negatived the English policy. Not only is it prob- 
able that Germany will "get through" ; but it is also 
possible that, under the English economic pressure, 
she will develop permanent substitutes for some of the 
products we formerly sent her. 

The common opinion is about as follows. Every- 
one knows that at the time of the Franco-Prussian 
War Germany had a population of 40,000,000. In 
1870 Germany had about as many people as its 
farms would feed. Everyone knows that this popula- 
tion has in the meantime grown to nearly 70,000,000. 
Germany's land area has not increased. Therefore, 
there must be about 30,000,000 people supported by 
imported food, mostly from Russia and from oversea. 
If Germany were deprived of Russia's exports, and if 



266 ECONOMIC ASPECTS OF THE WAR 

England shut off the supplies from oversea, then, it is 
reasoned, a population of 70,000,000 would be left 
with food materials sufficient for less than 60 per cent 
of that number. 

It is generally assumed that the 30,000,000 people 
added to the German population since 1870 have been 
supplied with food brought into Germany by the 
great expansion of that country's trade, which has 
advanced along with the growth of population. This 
is the more easily believable, because it is the explana- 
tion of the feeding of the increasing British popula- 
tion. Britain, like Germany, is an industrial country 
and is the only foreign land that we know much 
about. 

There are, however, important differences in the 
economic situation in the two countries as regards 
foreign trade and the food supply. 

Britain was the first "industrial nation," for the 
great industrial inventions were made there. In 
Britain the steam engine was invented and first 
applied to the manufacture of goods. The old order 
of production by hand was here replaced by the new 
order of production by machinery. This great ad- 
vance so cheapened goods that, aided by the low 
transportation charges brought about by the steam- 
ship and the steam railroad, England began to 
supply with manufactures that part of the world 
which could be reached by modern means of communi- 
cation and which did not erect a tariff wall high 
enough to keep England's products out. 

In return for these manufactures, England took 



STARVING GERMANY 267 

food to supply her rapidly growing population, and 
raw materials — such as our cotton — to work up 
into more manufactures. But the undeveloped coun- 
tries could not pay England with their own products 
for the enormous supplies she delivered to them. So 
they went into debt to her and sent to her stocks and 
bonds and mortgages for the railroad equipment, the 
harbor cranes and the mining machinery delivered 
to them. For instance, it is estimated that we owe 
England three and one-half billion dollars or more; 
that is the sum of English "investments" in this 
country. 

The British population, which grew from eleven to 
forty-four million in the nineteenth century, was 
being fed from abroad. British agriculture posi- 
tively declined, especially after a policy of free trade 
in the fifties left it defenseless against the cheap 
grain of the American prairies, the cattle of Texas 
(later the Argentine), the mutton of Australia, the 
dairy products of the thrifty Dutch and the Danes. 
Cheap transportation worked against the British 
agriculturists just as it worked in favor of the British 
manufacturers. Britain became a vast industrial 
town, with the rest of the world as the surrounding 
country. 

If Germany had followed the course Britain pur- 
sued she would be as vulnerable as Britain is today 
in her dependence on food from across the sea. 

The German states, like other European nations, 
had not been able to meet the competition of the 
established British industries. Germany was an 



268 ECONOMIC ASPECTS OF THE WAR 

agricultural land when it came into existence in 1871. 
It was supporting about as large a population as 
its land would maintain, in the agricultural stage. 
'Every year a larger number of natives had to emi- 
grate. German emigration to the United States 
reached 110,000 in 1870; 149,000 in 1873. It rose 
to 210,000 in 1881, and 250,000, the high-water 
mark, in 1882. By 1882 the influences were already 
at work by which the exodus of Germans was to be 
checked. 

The annual loss during the seventies of emigrating 
soldiers, taxpayers and laborers was regarded by 
Bismarck with grave misgivings. He decided that 
further growth of Germany and the retention of its 
increasing population depended upon a development 
of its industries. These industries would employ the 
increasing numbers of Germans. The products of 
these industries, just as in the case of England, would 
pay for the food of those employed in them. In 
1879, therefore, Bismarck consented to the establish- 
ment of a protective tariff, to shield infant German 
industries from being overwhelmed by British manu- 
factures. 

It took time for the effect of this tariff to be seen. 
The industries had to grow up before they could 
compete with England on international markets. 
Emigration was still high during the eighties and 
early nineties. Prices were low and trade depressed 
everywhere during the period of 1880-1894. But in 
1895 a recovery set in. The German industries were 
established and ready to take advantage of the re- 



STARVING GERMANY 269 

covery. In 1895 emigration to America dropped to 
32,000, and it has never since passed 50,000 in any 
one year. Since 1906 the total German emigration 
to all lands has not exceeded 32,000 in any year. 

Every year this outward movement has been more 
than balanced by an immigration into Germany of 
Poles, Galicians and Italians, to work in the indus- 
tries. That is, Germany has been able to take care 
of her normal increase in population, and more. It 
has been the popular impression that Germany has 
needed land to care for her teeming millions, and 
that a huge military establishment has stood ready 
to seize more territory when the least opportunity 
offered. The truth is that she did not need more 
land for her people but more people for her land. 

The growth of German export trade, a growth 
larger than that of the other great nations, is indi- 
cated by the following table: 

Exports of Leading Countries 1880 and 1912 

1880 1912 

Germany $ 718,375,000 $2,421,050,000 

England 1,393,833,000 2,994,805,000 

U. S. A 853,638,000 2,204,322,000 

France 890,200,000 1,764,780,000 

Germany, then, has proceeded along the same 
paths as England in developing herself into a nation 
that manufactures for foreign countries. Germany 
differs from England, however, in not having be- 
come dependent on oversea lands for food supplies. 



270 ECONOMIC ASPECTS OF THE WAR 

This would have been the result had Bismarck fol- 
lowed the British policy of free trade in food. Un- 
protected, the old high-priced German farms could 
no more have competed against American grain than 
could the English farms. 

When in 1879 a protective tariff was levied 
to protect industries, the German manufacturers 
clamored to have foodstuffs on the free list. They 
said that they could not compete with the English 
manufacturer, if the English workmen were allowed 
to buy their food in the cheapest markets, while the 
German workmen could not. The argument was 
sound, if the sole object was to become a great indus- 
trial country like England, importing food from 
abroad. Germany's purely industrial development 
would no doubt have proceeded more rapidly if no 
duty had been levied on grain and meat. But Ger- 
man agriculture would have declined, as did that of 
England. 

Bismarck considered that dependence on foreign 
food supply was perhaps a tolerable situation for a 
country like England, commanding the seas, but an 
intolerable one for Germany. Such a dependence 
would put Germany at the mercy of any nation with 
a stronger navy, and Germany did not have a navy 
of. any size, nor did she then propose to have one. 

Therefore the Chancellor determined upon a high 
protective duty on meat and grain (particularly 
wheat). The duty kept German agriculture in the 
field. The duty was later increased with the purpose 
of stimulating intensive production and keeping this 



STARVING GERMANY 271 

production adequate to the needs of the growing in- 
dustrial population. The attempt has been largely 
successful. 

Protective tariffs generally bring burdens in the 
shape of higher prices paid by the people who live 
under the tariffs. So in Germany. The German 
laborer has paid more for his meat and bread than 
the Englishman. Through the payment of higher 
prices for food, the German laborer has been taxed 
to supply the nation with the economic equivalent of 
England's navy ; namely, assurance of food supply 
in the time of war. But England's people, meantime, 
have been taxed in other ways to support their navy. 

To be sure, England uses her navy for other pur- 
poses than the protection of food supply. But, on 
the other hand, Germany's policy has attained a 
desirable result that England misses ; namely, the 
retention of a large population on the land. This 
has a great and definite social value. The country is 
the tired city's recruiting ground. The possession 
of very large agricultural contingents in Germany's 
armies is of not inconsiderable importance to her 
in the terrible strain of modern warfare. 

Germany's production of food, stimulated by the 
protective tariff, increased more rapidly than the 
population it was designed to support. In the 
admiration expressed for Germany's industrial de- 
velopment, this agricultural success has passed un- 
noticed. In the years 1883-1887 the population of 
Germany averaged 46,700,000. This grew to 67,- 
000,000 in 1913, an increase of a little less than 50 



272 ECONOMIC ASPECTS OF THE WAR 

per cent. An increase has occurred of more than 50 
per cent in the production of every important article 
of food and fodder ; namely, wheat, rye, barley, pota- 
toes, oats and hay. This result was due less to an 
increase of the acreage cultivated than to a more 
intensive cultivation and hence a greater yield per 
acre. 

In the early eighties Germany was self-supporting 
in the matter of foods ; that is, everyone was fed with 
the products of German soil. Since then, products of 
the soil have increased faster than the population. 
It follows that if the people were satisfied with the 
same scale of living as they enjoyed in the eighties, 
they could still be fed from German products. But 
in Germany, as elsewhere, in these twenty-five years, 
the standard of living has advanced. People have 
learned to live better. They eat more. The per 
capita consumption of wheat and rye was 40 per 
cent higher in the years 1902-1906 than in the years 
1886-1890. Hence the growing food imports in 
recent years. 

The rye, wheat and flour imports for industrial 
West Germany have been partly balanced by ex- 
portation to Scandinavia of rye, wheat, rye flour and 
wheat flour from agricultural East Germany. These 
exports were of course stopped when the war broke 
out, with a view to conserving Germany's home 
supply. But there was still a clear balance of im- 
ports into Germany, a supply which was sure to be 
missed, and for which no substitute could be found. 

It must be recalled that the war broke out on 



STARVING GERMANY 273 

August 1, before Germany was able to import any of 
the 1914 agricultural products. When Britain cut 
the German oversea supplies, the problem that faced 
the Germans was not one of absolute starvation, as 
the British assumed. But it was the difficult prob- 
lem of returning to a scale of living that had been 
outgrown, but which was nevertheless more than suffi- 
cient for actual physical needs. 

To prevent extortionate prices for the limited 
supply of food on hand, the German Government 
early in the war set maximum prices that could be 
charged for many foodstuffs. The maximum prices 
served their purpose well. They kept nourishing 
food within reach of the poor and of the great masses 
of those dependent on men fighting at the front. 

Next, an effort was made to restrict consumption 
by appealing to the patriotism of the people. The 
government exhorted the people at home to cut down 
their use of food and so supplement the work of the 
soldiers in the field. 

Unfortunately this was not sufficient. If there had 
been no maximum prices set, rising prices would have 
automatically reduced the use of food as it became 
apparent that the supply would not last until the 
next harvest. The government could have controlled 
the use of food at any time by repealing its maximum 
price law. But this would not have reduced the con- 
sumption equally on the part of the whole population. 
The rich and the well-to-do would have bought as 
much as before. The reduction would have fallen 
entirely on the poor and dependent. 



274 ECONOMIC ASPECTS OF THE WAR 

One way was left to combine the benefit of maxi- 
mum prices with the necessity for making the food 
supply last until the next harvest, — namely, for the 
government to take over the supply and distribution 
of the foods of which a shortage was threatening. 
By the end of the year 1914 such a shortage seemed 
possible in grain and flour. One serious difficulty had 
arisen from the circumstance that the maximum 
prices that could be charged for grain were such that 
it paid the farmer to feed grain to live stock rather 
than sell it in the market. 

Hence the now famous Decree of the German 
Federal Council, dated January 25, 1915. This 
document was 3,500 words long, and bore the title 
"Announcement concerning the Regulation of the 
Trade in Bread-Grain and Flour." The essence of 
the Decree was contained in the first paragraph, 
which read : 

"On and after the first of February, 1915, all 
supplies within the empire of wheat, rye (oats and 
barley were later included), pure or mixed with other 
grain, thrashed and unthrashed, are seized on behalf 
of the War Grain Society, Limited, in Berlin. In the 
same way all supplies of flour made of wheat, rye, 
oats and barley will be seized in behalf of the com- 
munities in which they are found." 

The terms of the Decree did not apply to supplies 
belonging to the empire, to a state, to the military 
or naval authorities or to the Central Bureau which 
provisioned the army. The Decree was designed to 



STARVING GERMANY 275 

guard, essentially, the food of the civil population. 
Moreover, as noted elsewhere, all imported grain and 
flour were excepted. 

The exceptions included, further, farmers' seed 
grain supplies, and supplies for their households. 
Mills and flour dealers were put under regulation as 
to the amount of their sales. Bakers were restricted 
to the use of three-quarters of their former amount of 
flour. Such were the provisions of the ordinance. 

Later a special Kriegsbrot (War Bread) was pre- 
scribed for the bakers to make, consisting of wheat, 
rye and potato flour. Pure wheat bread was not to 
be baked. Above all, a reduced consumption was 
assured by the bread card system. Each person was 
given every week a commutation card calling for 
bread to equal 225 (later 200) grammes of flour per 
day. Bread could be obtained at bakeries or restau- 
rants only upon the presentation of the card, which 
was duly punched. When 7 x 225 grammes were 
punched out of the card, the person could get no more 
bread until the following week. 

It was considered an act of patriotism to go 
through the week with some of the bread allowance 
on the card unused. The equivalent of 225 grammes 
per day is 150 pounds of flour per year. This is 
well over the amount that will support life, but far 
below the amount that had been used by the German 
population in recent years. For example, in 1902- 
1906 the average annual German consumption of 
wheat and rye was 495 pounds per person, over three 
times as much as was allowed on the bread cards. 



276 ECONOMIC ASPECTS OF THE WAR 

It is well to note this reduction. It is a common 
statement that Germany was never in danger of 
starvation and that she could not possibly justify 
her submarine campaign as a proper defense against 
Britain's plan to starve her. Today we can make 
light of any plan of starving Germany. But on 
February 4, when the submarine campaign was 
launched, starvation was by no means impossible. 
The danger which the German Government felt is 
measured by the drastic measures of self-denial which 
it imposed upon civilians. 

Von Loebell, German Minister of the Interior at 
that time, wrote to Professor Sering of Berlin : 

"We shall be able to subsist during the war only 
if our mode of life is radically different from that to 
which we have been accustomed during the long 
period of peace. The soil of Germany is fertile and 
can maintain the population of the country, but what 
it produces has not always in the past most appealed 
to us. We need not starve, but we must be saving 
and live simply, eating less wheat and white bread 
and more black bread and potatoes and utilizing 
what formerly was waste. We must begin our saving 
now, if it is not too late. Every household must be 
placed on a war footing. Economy and self-denial at 
home are like readiness to face death and courage at 
the front." 

A problem quite as serious as that of food for the 
population was that which confronted Germany with 
regard to fodder for its live stock. Under normal 
conditions fodder constitutes a large portion of the 



STARVING GERMANY 277 

cargoes that fill ships going to Germany. The great 
items are barley, oil-seed and oil cake, bran and corn. 
Altogether, imports of fodder exceed exports by 
more than 7,500,000 tons. Evidently, with imports 
of fodder cut off, there was necessary either a reduc- 
tion of live stock or a diversion to the feeding of live 
stock of grain that ought to be reserved for human 
beings. 

Two measures were adopted: one, to reduce the 
numbers of live stock, and the other, to increase the 
supply of home fodder. 

At the opening of the war there were 25,000,000 
swine in Germany. With imports of fodder cut off, 
farmers tried to keep their swine alive by feeding 
them grain and potatoes. At the ruling maximum 
prices of grain, potatoes and meat, it paid the farmer 
to turn grain and potatoes into pork before selling 
to the public. By the end of January the swine had 
eaten most of Germany's oats, and a large portion 
of the potato crop. 

At the same time that the January 25 Decree con- 
fiscated supplies of grain and flour, there was passed 
a Decree of the Federal Council aiming at a reduc- 
tion of the number of swine. Towns of 5,000 and 
over were ordered to purchase and preserve quanti- 
ties of pork, and for this purpose were empowered to 
confiscate the swine supply. How many of the 
25,000,000 swine were thus appropriated we do not 
know. In February Professor Schumacher esti- 
mated that it would have been possible to save 
alive 18,000,000 of the 25,000,000 swine, if the 



278 ECONOMIC ASPECTS OF THE WAR 

precautionary measures described had been taken 
earlier in the war. As it was, he expected that 9,000,- 
000 would be saved. 

In any case, vast quantities of pork have been pre- 
served by the German communities, and swine reduced 
to the numbers which can be conveniently supported 
without drawing upon the foods that support men — 
notably potatoes. All potatoes were needed for men, 
to help eke out the supply of bread-grain. Potatoes 
were withdrawn from fodder use, both by the drastic 
reduction of the number of swine and by a. raising of 
the price maximum by 35 marks per ton, which 
occurred February 15. This price increase induced 
the farmer to sell his potatoes for human use. 

So much for the means taken to reduce the supply 
of swine. The second problem of Germany was to 
find a way to replace out of her home supplies a large 
amount of fodder formerly imported, in order to 
support the remaining live stock. There were two 
possibilities. First, a large volume of potatoes are 
ordinarily distilled into alcohol, used in beverages 
and in the industries. Further, about 400,000 tons 
of beet sugar are annually exported, mostly to Eng- 
land. This exportation, of course, ceased with the 
opening of the war. 

A determined and successful war has been carried 
on against alcoholic beverages in Germany; and the 
industrial demand for alcohol has diminished. This 
has set free such a mass of potatoes that there is now 
a quantity available for fodder even after all human 



STARVING GERMANY 279 

wants are met.* Moreover, a method was found of 
making the unexportable raw sugar tonnage avail- 
able for fodder. Nitrogen in the form of ammonium 
sulphate, a by-product of the coking industry, has 
been mixed with the sugar to make a fodder with over 
50 per cent of albumen. This discovery was the work 
of the Institut fuer Gaerungsgewerbe (Institute for 
the Yeast Industries) in Berlin. It means a substi- 
tute for the fodder albumen formerly contained in 
imported barley. A new straw meal has made the 
food values in straw available for live stock. 

So successful have been the German restrictive 
measures that at the end of May, 1915, the price of 
flour was reduced, and the communities were stopped 
from further slaughtering and pickling their swine. 
For the first war year the problem is solved. It is 
now known that several million tons of grain and 
fodder will be carried over to the next season, along 
with the crops now being harvested. Any shortage 
of grain in the future will be met by a reduction in 
the supplies for food animals. This means a reduc- 
tion in the German meat consumption which is, how- 
ever, now far above the physiological minimum. 

The best measure of the success of the German 
policy of price maxima and government distribution 
is that at present food prices in blockaded Germany 
are lower than in unblockaded England. 

Next year's harvest has already been planned to 
meet the new conditions. The needs are, compared 

* The German potato crop averages 40,000,000 to 50,000,000 
tons. 



280 ECONOMIC ASPECTS OF THE WAR 

with last year, more wheat and more fodder. The 
easiest and most abundant crop of fodder that can be 
raised is potatoes. Every effort is being made to 
attain these objects. Only 60 per cent of the normal 
area devoted to sugar beets is being sown for beets. 
It is estimated that this will supply the home sugar 
demand. The remaining 40 per cent of the former 
beet area was planted with wheat and potatoes. Soil 
has been sown which under normal conditions was not 
worth cultivating. Moorlands in Brandenburg, 
Pomerania, Schleswig-Holstein, Hanover and West- 
phalia have been drained and planted. We read of 
potatoes growing on former tennis courts and front 
lawns. 

The occupied regions of Belgium, France and (to 
a lesser degree) Poland have been planted, and while 
they will not contribute to the feeding of the civilian 
population of Germany, they will help feed the 
4,000,000 soldiers quartered upon them. Early in 
the war, large food supplies were found in such 
centers as Antwerp, and these were available for 
feeding the German army in the West. The Russian 
invasions of East Prussia, which produced about 
60,000,000 bushels of Germany's wheat, were less 
destructive to the wheat than to the homes, farm 
buildings and implements of the owners. The Russian 
army sweeps clean. However, great efforts have been 
made to rebuild East Prussia, and certainly a large 
part of its normal harvest will be gathered. 

So many farm laborers were drafted into the army 
that during the last harvest a shortage of hands 



STARVING GERMANY 281 

was feared. But volunteer helpers nearly swamped 
the farmers. In addition, this year there are nearly 
two million prisoners to help gather the harvest and 
most of these prisoners are Russians, farmers by 
profession. The supply of farm horses will be 40 per 
cent less than in peace time. This lack will be met by 
a large use of colts, oxen and cows, and also by an 
increase in the employment of motor plows using 
benzol as fuel. 

Finally, Germany in this crucial year has been 
helped through by a smuggling trade of large pro- 
portions. Probably the smaller part of this trade 
was in American breadstuff's and provisions moving 
into Germany via adj acent neutrals. No doubt there 
has been a considerable volume of this business. No 
doubt it will continue, no matter how stringent the 
"blockade." Once goods are in the free channels of 
commerce in Scandinavia, the sharpest laws and the 
most industrious British supervision cannot prevent 
them from being drawn over the borders into Ger- 
many by the magnet of high prices. And there can 
be no scarcity in Germany that is not reflected in 
attractive prices for imported food, which is exempted 
from the government grain monopoly and the govern- 
ment's price maxima. 

Yet the largest smuggling trade has been from 
Roumania and Russia. Roumania is normally a 
heavy exporter of grain. In the fall of 1914, before 
her exports were marketed, the Dardanelles were 
closed. Austria and Germany both had wheat defi- 
cits, and were paying high prices for imported wheat. 



282 ECONOMIC ASPECTS OF THE WAR 

What else could Roumania do with its grain than sell 
to the Teutonic Allies? It sold them so much that 
before the first of 1915 the Roumanian Government 
put an embargo upon further exportation, and in 
the spring of 1915 that country was even buying 
wheat to carry its population through to the summer 
harvest. 

Roumania, having marketed its own grain, turned 
dealer for Russia. Russia has always been dependent 
upon her exportation of grain to pay for her imports 
of other things and the interest on her enormous 
foreign debts. Her grain crop, harvested, found the 
Dardanelles closed by the Turks and the Baltic exit 
held by the Germans. Exportation to western 
Europe via Vladivostok and the Suez Canal was out 
of the question, partly by reason of the high freights 
and partly because of the deterioration due to trans- 
portation through the tropics. 

Moreover, Russian grain cannot be indefinitely 
stored, as ours can. That country has few grain 
elevators like those of the United States and western 
Europe. Russian grain is usually sacked and stored 
on the open shipping platform of the country rail- 
road station, covered only with a tarpaulin. At best 
it is put into an unheated shed. There is no capacity 
at the Russian seaboard for the storage of any quan- 
tity of grain. The successful marketing of the 
cereal depends upon an unhindered movement from 
ports like Odessa. Restrict that movement, and the 
grain backs up on the station platforms and in the 
farmers' shacks. 



STARVING GERMANY 283 

The dealers in this grain are mostly Jews. They 
have no especial love for Russia. They had advanced 
money to the farmers for which the grain served as 
security. They could get their money back only by 
selling the grain. The only countries they could 
reach, and which wanted to buy grain, were Germany 
and Austria. 

Therefore they sold to Germany and Austria, not 
direct but via Sweden and Roumania. The early 
Russian embargo on grain exportation was universal, 
but this changed to an embargo on exports to 
Russia's enemies. The New York Journal of Com- 
merce of February 18 contained a despatch from St. 
Petersburg, in which the Russian Ministry of Com- 
merce and Industry was reported as believing that 
quantities of foodstuffs were reaching Germany from 
Russia through Finland and Sweden. The attention 
of the Russian authorities had been called to unusual 
shipments which had resulted in flooding Finland with 
frozen meat, flour, grain, butter and eggs. An 
inquiry was said to have revealed that Swedish com- 
mission merchants, who bought from the Finns, in 
most cases represented houses in Hamburg. The 
extraordinary demand for the Russian ruble in coin 
or in bills — a demand existing in both Sweden and 
Denmark — and the high prices offered for produce 
in Finland, were considered clear signs of this illegal 
trade. 

The Russian Government itself must have winked 
at this trade. It was the only means of letting the 
Jew dealers make money, so that they would be avail- 



284- ECONOMIC ASPECTS OF THE WAR 

able for taxation. The February 18 "discovery" of 
the Russian Ministry of Commerce and Industry may 
be attributed to pressure exerted on Russia by Eng- 
land to support the British starvation plan. There 
is plenty of evidence that the Russian trade did not 
cease on February 18. If the Dardanelles still hold 
out when the Russian 1915 harvest is gathered, we 
may expect to see another flood of foodstuffs into 
Germany, if Germany is in the market. The chances 
are that the latter country will have far less use for 
imported food during the coming year. 

With respect to Germany's measures for increas- 
ing agricultural production, one difficulty has existed 
of a kind not yet mentioned. This is the loss of 
foreign supply of fertilizer. The large German agri- 
cultural production, on an area only equal in size to 
the state of Texas, is only possible by a liberal use 
of fertilizer. Commercial fertilizer is made from 
potash, lime, nitrogen and phosphoric acid. Ger- 
many has the necessary potash and lime. Nitrate 
has been imported in the form of Chili saltpeter, of 
which 800,000 tons annually are brought from South 
America. Some nitrogen has been procured at home 
from ammonium sulphate, a by-product of coal- 
tar distillation. Phosphoric acid has come from 
abroad in the form of phosphate rock. A million 
tons are annually imported : 400,000 from the United 
States and 600,000 from Algiers and Tunis. 

The oversea supply of nitrate and phosphate was 
cut with the opening of the war. Fertilizer could 
not be made without them. If fertilizer could 



STARVING GERMANY 285 

not be made, there was the prospect of a decrease of 
25 per cent in the production of German agriculture. 
One of the German triumphs has been in the meeting 
of this situation. 

The foreign phosphate supply was replaced by 
reclaiming the phosphate waste in the slag of iron 
ore smelted in Lorraine from the "minette" ore. The 
foreign nitrate supply was replaced partly by a 
larger quota of ammoniates from the coal-tar dis- 
tilleries, but principally by the extraction of nitrogen 
from the air. This process had been developed — 
largely by German capital — in Norway, because 
there existed in Norway the cheap water power 
which alone made it commercially possible to pro- 
duce this artificial nitrate in competition with the 
natural product of Chili. After the outbreak of 
the war, five such nitrate factories were established 
in Germany.; — So the fertilizer difficulty has been met. 

The new supply of nitrate also solved the powder 
question for Germany. Chili saltpeter was cut off 
by England's sea power, and a nitrate is necessary 
for powder. In ignorance of this substitute Sir John 
French in May gave an interview to the Havas 
Agency saying that the Germans were getting chary 
of ammunition and not wasting shells as before 
"because the failing supply of nitrates necessary for 
high explosives is making itself felt in Germany." 

So much for the prospect of starving Germany in 
the matter of foods. How is it with regard to the 
necessary raw materials of industry? The situation 
has been considered at other points with respect to 



286 ECONOMIC ASPECTS OF THE WAR 

cotton, copper, rubber and wool. It was not hard to 
show that Germany's supply of each of these, or of 
substitutes for them, is such that there is no prospect 
of Britain's interference with the oversea supply 
affecting the duration or outcome of the war. 

This applies also as to oil. Germany annually 
imports 750,000 tons of petroleum, over two-thirds 
of it from the United States. In the fiscal year 1914, 
ending June 30, we sold Germany $20,000,000 worth 
of petroleum or its products. Petroleum was made 
absolute contraband by Britain on October 29. There 
is no more flagrant abuse of British manipulation of 
the contraband list than is afforded by petroleum. 
Absolute contraband means articles so suited for war- 
like use that their destination for the military must be 
assumed. Such articles are guns and powder. But 
petroleum is used primarily for light, and, moreover, 
used by the poorer classes. The next largest use of 
it is in the form of gasoline, for motors. Some 
motors are mounted in automobiles, and some auto- 
mobiles are used by the military. Can petroleum, by 
any stretch of the imagination, be conceived of as 
conforming to the definition of absolute contraband 
of war; namely, obviously warlike nature, use and 
destination? In the Declaration of London petro- 
leum was not even on the conditional contraband list. 

As has been the case with much of England's pro- 
cedure in "starving" Germany, so with oil. The 
pressure has been heavier on the United States than 
on Germany. The Germans have found a substitute 
for the oil they could no longer import from us. The 



STARVING GERMANY 287 

Americans thrown out of work by an enforced de- 
crease in our production and refining of oil were less 
able to find substitute work in a depressed labor 
market. 

To a considerable extent, gas and electricity have 
been used to replace petroleum. Moreover, the Ger- 
mans have a substitute for gasoline as a motor fuel 
in benzol, a product of the great coking industry 
which produces coke and coal-tar. From the coal- 
tar are distilled the various products that are bases 
for the dyestuff industry, including benzol, which 
also has other uses. Benzol is an acceptable substi- 
tute for gasoline for all motor purposes, except such 
special uses as submarine and aeroplane engines. For 
these uses Germany will hardly starve for gasoline. 
The stock on hand at the opening of the war was 
80,000 tons, and in May, 1915, the German forces 
drove Russia out of the great Galician oil fields. 

If we stand aside much longer and see Germany 
compelled to find substitutes for American products 
which Britain — according to our interpretation of 
international law — illegally bars from Germany, it 
is not impossible that we may force Germany so to 
develop her substitutes that our old markets will be 
permanently gone. 

We should not be pleased, at the end of the war, to 
find that Germany had developed a benzol that was a 
perfect substitute for gasoline, and that she had pipe 
lines from Galicia to supply such gasoline as she 
continued to buy. The phosphate rock producers 
would not be happy if Thomas slag proved a per- 



288 ECONOMIC ASPECTS OF THE WAR 

manent substitute for our Florida rock. The copper 
miners would suffer if Germany, the largest user of 
copper, found the new soft steel suitable for many of 
the old uses of copper. Our farmers may not rejoice 
to find that we have aided in forcing Germany to 
raise at home the wheat and meat that we annually 
sold her in the past. May not Britain be asking us 
to drive German genius farther than our interests 
can follow? 

Because of the sacrifices which Germany has laid 
upon herself, because of the genius which devised 
substitutes for what could not be imported, and be- 
cause of the skill with which she has thrown her whole 
industrial organization into the new lines demanded 
by the state of war, her industries have worked on 
with perhaps less disturbance than is apparent in 
any other of the fighting countries. The English 
themselves admit this. For example, a writer in the 
March British Technical Journal of Engineering 
writes : 

"In examining into the reasons why German indus- 
try has not only escaped being brought to a stand- 
still by the war, but has even worked on with an 
imposing certainty without any suspicion of nervous- 
ness, it becomes clear that the most potent factor is 
that the German army aided in carrying the war 
into foreign countries. In addition to this, the indus- 
trial and financial authorities succeeded by wise meas- 
ures in establishing confidence in the power of resist- 
ance of the German industrial organization, which in 
its turn rested upon military success. 



STARVING GERMANY 289 

"The causes of the uniform continuity in German 
industrial growth, however, in the last instance, 
ought to be found in the fact that German develop- 
ment more than that of any other country has grown 
systematically and shows no gaps of any moment in 
the manufacturing process. Germany produces her- 
self all her half-finished goods, and she utilizes the 
residuary products of her industrial processes for 
the manufacture of valuable auxiliary commodities, 
with such financial results that no other industrial 
nation in the world even approaches her in this re- 
spect. What these auxiliary products mean to Ger- 
many at the present time is more especially demon- 
strated by sulphate of ammonium (nitrate) and 
benzol (fuel). The industrial expansion of Germany, 
although it is much newer than that of England, has 
been laid out on more systematic lines and in such a 
way as to render the country more nearly independ- 
ent of foreign aid. Under the difficult and strenuous 
conditions of war are demonstrated the extreme value 
of system and method and the advantages which they 
confer on a nation when it is cut off from countries 
from which it draws raw material." 

There is no indication of any industrial collapse 
in Germany, due to "economic pressure." Unem- 
ployment is no greater than in peace times. The- 
freight earnings of the state railways, the surest 
measure of the movement of business, are nearly 
normal. There has been a decrease in foreign trade 
with oversea countries, not with all countries. Adja- 
cent neutrals are still supplied by Germany, some of 
them in higher degree than ever before. The de- 
crease in foreign trade is compensated, so far as 



290 ECONOMIC ASPECTS OF THE WAR 

industry in general is concerned, by the vast increase 
in production for the military. 

One of England's mistakes in the war has been the 
willingness to sit still so long, and to await the silent 
action of the irresistible "economic pressure" which 
the siren voice of Winston Churchill told them would 
defeat Germany as certainly as winter struck the 
leaves from the trees. Whether Churchill's country 
can now regain the ground which Germany won 
while England was lulled by the siren, is the question 
of the outcome of the great European War. 

How the war comes out is none of -a neutral's 
affairs. Our business as a nation is to look after 
our own interests. If there has been any lurking 
belief that we could serve those interests by silently 
aiding Britain's economic pressure and so shortening 
the war and the period of our sacrifices, knowledge of 
the facts and the prospects must dissipate the illu- 
sion. The war will be shortened by military victory, 
in which we, as neutrals, cannot be participants. 

Our interests dictate a resumption of our peaceful 
trade with Germany. Our interests speak the same 
language as our rights, our duty to treat belliger- 
ents alike and our need for maintaining precedents 
under which our children can live. 



CHAPTER XV 

War Orders and the Power They Place in Our 
Hands 

Of all our exports, the most attention has fallen 
to the export of war munitions. We have heard a 
great deal of the moral and legal question as to 
whether a neutral should or may send abroad 
weapons for killing citizens of a nation with whom 
we are at peace. Such exportation is said to be more 
unjustified, because circumstances are such that only 
one of the belligerents, the Allies, can get supplies 
from us, while Germany cannot. On this ground we 
are charged with being unneutral as well as inhuman 
and false to our professions of being haters of war. 
The question is perplexing millions of Americans. 
No quick judgment can be passed upon it. Nor can 
any one person judge for another. Each decides 
for himself according to the combination which his 
own mind makes of such conflicting elements as hu- 
manity, our rights, our obligations, our precedents, 
our future and our material interests. 

Before this war had been many months under way, 
it became apparent that it was to be largely a matter 
of ammunition. It is an artillery war. Under the 
hail of German shells the fall of Liege, Namur, Ant- 
werp and Maubeuge was a matter of days. Then 



292 ECONOMIC ASPECTS OF THE WAR 

Von Kluck was stopped in his rush for Paris partly 
because of a lack of ammunition. All winter the 
armies lay facing each other, inactive except for 
sporadic attacks, while Krupp, Skoda, Vickers, 
Schneider, the Bethlehem Steel Company and the 
Japanese arms and ordnance works were rushing 
through their orders to make ready for the spring 
campaign. Kitchener's remark that he did not know 
when the war would end, but that it would begin in 
May, was typical for all the contestants. They were 
waiting less for the firm dry ground of May than 
for the spring crop of shells. 

The May days were battles of artillery. It was 
the terrible bombardment of British guns that cleared 
the way for the advance at Neuve Chapelle. It was 
heavy German guns that tore Hill 60 like a volcanic 
eruption when the British tried to hold it. French 
Seventy-fives in May buried German trenches before 
they were captured. Przemysl was "sprayed" with 
Teutonic shells and the fortress which Russian in- 
fantry had besieged for months fell before German 
artillery in as many days. It was lack of ammuni- 
tion that forced Russia — largely cut off from foreign 
supplies by the Dardanelles and German control of 
the Baltic and with Archangel long closed — to lose 
all Galicia, Bukowina and Poland in the summer 
months of 1915. 

Under these conditions it was natural for the 
Allies, who controlled the seas and who alone could 
keep up communication with us, early to close con- 
tracts with our main ammunition, arms and ordnance 



WAR ORDERS 293 

factories. The ammunition people were booked full 
for a long period ahead. Some big guns have been 
ordered, mostly from Bethlehem Steel, but the Allies' 
factories were better able to turn out the guns. It 
was shells they needed, particularly shrapnel. The 
big guns and small arms that we exported have gone 
primarily to Russia, because Russia is short on fac- 
tories for war materials, having relied on the French 
and German makers ; and because Russia in her 
Masurian and Galician defeats, when whole armies 
were captured, suffered the loss of vast quantities of 
the tools of war. 

Shells were the principal demand. Shrapnel 
shells can be made by anyone with a lathe who can 
get the steel to work with. This country has an 
unlimited supply of steel and a very large number of 
machine shops which, due to the slack times in our 
industrial situation at home, were glad to get the 
shell contracts that were sublet to them by great 
contractors for the foreign governments, like the 
Canadian Car and Foundry Company. There is no 
doubt that these shell orders have been of consider- 
able financial aid to great industries like those which 
manufacture electrical supplies, to the railroad 
equipment companies which at the beginning of the 
war noted the disappearance of incipient railroad 
orders, and to many a small machine shop through- 
out the land. 

Before the end of 1914 a very large number of our \ 
industrial concerns were interested, directly or in- 
directly, in manufacturing implements of war. We 



294 ECONOMIC ASPECTS OF THE WAR 

have a large population of German or Austrian ex- 
traction who were outraged at the prospect of our 
turning allies of the Allies ; and the practical effect 
of the situation was, they claimed, nothing less than 
this. When Congress opened in the first week of 
December bills prohibiting the export of arms to 
belligerents were introduced in both the House and 
the Senate, the bill of Senator Hitchcock of 
Nebraska being the one to which most attention has 
been paid. It never got beyond the Committee of 
Foreign Affairs, to which it was referred; the same 
fate befell Senator Works' later bill and also the 
various House measures. 

A great many American manufacturers were un- 
willing to embark upon the manufacture of munitions 
of war without knowing that this was approved by 
our State Department. Many letters were sent the 
Department on the matter and on October 15 it issued 
a statement of its position. It said that a citizen of 
the United States could sell to a belligerent govern- 
ment or its agents any article of commerce which he 
chose. The risk he ran was that the goods he shipped, 
if contraband, would be intercepted and confiscated, 
if possible, by the belligerent against whom they 
were to be used. A neutral government is not com- 
pelled by international law to interfere with contra- 
band trade from its territory to the belligerents, nor 
is the President of the United States or any execu- 
tive department of the government possessed of the 
power so to interfere. So the statement read. 

Official complaints of the German Government were 



WAR ORDERS 295 

at first directed not against our exportation of arms 
and ammunition in general, but against our exporta- 
tion of war implements which were forbidden by 
international law. On December 8 Count Bernstorff 
called the attention of the State Department to 
alleged violations of international law by the British 
army. It was stated that the British army was using 
dum-dum bullets. It was claimed that Winchester 
and the Union Metallic Cartridge Company were en- 
gaged in supplying illegal forms of arms and ammu- 
nition to the Allies. The State Department was 
asked to investigate these charges. 

On January 8 the State Department answered the 
German Ambassador. It stated that, while it was 
willing to take into consideration such assertions as 
were made in the Ambassador's note, with regard to 
the British use of dum-dum bullets, it would not 
investigate such charges or make any comment upon 
them. Regarding the charge that American com- 
panies had been making illegal sorts of ammunition, 
the specific denial of Winchester and the Union Metal- 
lic Cartridge Company was communicated to the 
Ambassador. 

About the middle of December it came to the 
knowledge of the administration that the president 
of the Bethlehem Steel Company, C. M. Schwab, had 
contracted to deliver twenty submarines to Great 
Britain during the war. The submarines were to be 
delivered to Britain in parts, which were to be 
assembled across the water. The Bethlehem Steel 
Company apparently figured that this measure 



296 ECONOMIC ASPECTS OF THE WAR 

would avoid the Hague Convention prohibition which 
forbids neutrals to construct war vessels for a bel- 
ligerent. The State Department thought differently 
and Mr. Schwab, it was reported, agreed to desist. 

The other case in which the administration was 
called upon to decide the legality of the exportation 
of war supplies was with regard to hydro-aeroplanes. 

On January 19 the German Ambassador at Wash- 
ing wrote the Secretary of State complaining that 
hydro-aeroplanes were being constructed in the 
United States and shipped to the Allies. He stated 
that hydro-aeroplanes were war vessels whose de- 
livery to belligerent states by neutrals should be, 
stopped under Article 8 of the Thirteenth Conven- 
tion of the Second Hague Conference of October 18, 
1907. The answer of the Secretary of State was a 
nugget of gold in the dry pages of diplomatic corre- 
spondence. 

Its essential part reads: 

"As to the assertion of the character of hydro- 
aeroplanes, I submit the following comments: The 
fact that a hydro-aeroplane is fitted with apparatus 
to rise from and alight upon the sea does not, in my 
opinion, give it the character of a vessel any more 
than the wheels attached to an aeroplane fitting it to 
rise from and alight upon land give the latter the 
character of a land vehicle." 

Presumably, if conditions were reversed and the 
British were protesting hydro-aeroplanes which were 
being- shipped to Germany, the ingenious German 
Ambassador would contend that the machines had 



WAR ORDERS 297 

asbestos fittings on their wings and hence were to be 
classed as fireflies. 

In January the American Government had a second 
occasion to state its position regarding the exporta- 
tion of war implements in general. On January 8 
Senator Stone of Missouri wrote a letter to the 
Secretary of State. In this letter he summarized the 
complaints that he had received from sympathizers 
with Germany and Austria, regarding the manner in 
which we had been guarding our neutrality in the 
war. Complaint No. 9 was that we had exercised 
"no interference with the sale to Great Britain and 
her Allies of arms, ammunition, horses, uniforms and 
other munitions of war, although such sales pro- 
longed the war." 

In the answer of the Secretary of State, two weeks 
later, it was stated that the President of the United 
States had no power to prevent the sale of ammuni- 
tion to the belligerents. It was said that it is not 
the duty of a neutral to restrict trade in munitions of 
war, and such had never been the policy of this gov- 
ernment except in cases of civil strife in neighboring 
American republics. Germany herself, the answer 
continued, had been an enormous shipper of arms and 
ammunition to belligerents ; for example, during the 
Russo-Japanese War. Moreover, Mr. Bryan said, 
on December 15 the German Ambassador presented 
a memorandum of his government specifically stating 
that under international law no exception can be 
taken to neutral states letting war material go to 
Germany's enemies. Finally, the answer read, these 



298 ECONOMIC ASPECTS OF THE WAR 

principles had been laid down by the United States 
Government in the October 15 proclamation of the 
Department of State, entitled "Neutrality and the 
trade in contraband." 

The German Government, apparently encouraged 
by the agitation in this country regarding the export 
of ammunition, included a reference to it in its first 
formal note to us : the note of February 16, answer- 
ing our protest regarding the German War Zone. 
In this note, the Germans pointed out "very particu- 
larly and with the greatest emphasis" that a trade 
in arms estimated at many hundred million marks 
had arisen between American manufacturers and 
Germany's enemies. It was admitted that no formal 
breach of neutrality could be charged but both the 
German Government and the German people felt 
themselves placed at a great disadvantage in that 
neutrals achieved no success in the assertion of their 
legal right to innocent trade with Germany while 
they persisted in their contraband trade with Great 
Britain. — The words were less a protest against our 
export of arms on principle than against our export 
of arms to England when we refused to insist upon 
our right to send food and raw materials to Germany. 

This passage in the note of the German Govern- 
ment required no answer. The same cannot be said 
of an unusual communication from the German Am- 
bassador to the State Department, dated April 4, a 
short note enclosing a memorandum of the Ambassa- 
dor on the subject of our arms exports. 

The memorandum stated that, because of the 



WAR ORDERS 299 

British Orders in Council, neutral trade with Ger- 
many had been strangled. The Wilhelmina, the first 
food ship for Germany, had been held up for two 
months. Such a delay, the Ambassador continued, 
was equivalent to a denial of the American right to 
trade. The Imperial Embassy must, therefore, 
assume that the United States Government acquiesced 
in the violations of international law by Great 
Britain. It was claimed that all previous policies 
of shipping arms to neutrals were inapplicable in this 
war. The United States was said to be the only 
neutral nation furnishing war material to belligerents 
and an entirely new industry was being created in 
America for this purpose. It was pointed out that 
the industry was delivering goods only to the enemies 
of Germany. The least that America could do, the 
Ambassador said, was to utilize its supplying of arms 
to England for the purpose of protecting its legiti- 
mate trade with Germany, especially in foodstuffs. 

Moreover, the memorandum went on, for the 
United States to put an embargo on the export of 
arms to belligerents in Europe would be similar to 
President Wilson's reason for putting an embargo 
on the exportation of arms in Mexico; namely, in 
President Wilson's words : 

"Because Carranza had no ports, while Huerta had 
them and was able to import these materials, it was 
our duty as a nation to treat Carranza and Huerta 
upon an equality if we wished to observe the true 
spirit of neutrality as compared with mere paper 
neutrality." 



300 ECONOMIC ASPECTS OF THE WAR 

• 
The German Ambassador then asserted that this 

principle, if applied in the present case, would lead to 

an embargo on the exportation of arms. 

On April 21 Mr. Bryan sent to the German Am- 
bassador an answer which the President of the United 
States had written. It was a proper answer to the 
memorandum of Count von Bernstorff. It suggested 
that the relations between the United States and 
England were not a proper subject of discussion for 
the German Ambassador. It was assumed that the 
Ambassador did not intend the clear implication in 
his note that the United States had not in good faith 
been performing its duties as a neutral. As a matter 
of fact, the answer continued, the United States had 
acquiesced in no violation of its neutral rights. It 
was shown that this was evidenced by our notes of 
protest to England. Our impartiality, said the 
President, was evident by our suggestion to Great 
Britain and Germany that they should return to the 
fold of international law. It was denied that the 
United States Government had the choice of stopping 
the sale and exportation of arms by its citizens. It 
was affirmed that under international law, if a coun- 
try is to maintain its neutrality, it may not during 
the progress of the war alter its own rules of neutral- 
ity. The President said that the placing of an 
embargo on the trade in arms at the present time 
would be a direct violation of our neutrality. 

In July, 1915, the Austrian Government formally 
protested our ammunition exports. An answer was 
sent Austria early in August, similar to the answer 



WAR ORDERS 301 

sent Count von Bernstorff. The Germans alleged 
the presence of ammunition on the Lusitania as their 
justification for torpedoing her. The crux of the 
present diplomatic correspondence with Germany is 
the question whether passengers can sail on munitions 
ships and protect those ships from sudden attack by 
submarines. 

As a matter of fact, the German Government 
cannot well call upon either international law or its 
own practices to contest our right to ship arms to 
belligerent nations. It was in the manufacture of war 
materials delivered all over the world to nations both 
at peace and at war that Krupp grew so great that 
it can now supply most of the needs of the Teutonic 
Allies, without outside aid. In Article 7, Convention 
VII, and Article 7, Convention XII, of the Hague 
Conference of 1907 the right of neutral citizens to 
ship arms to belligerents is stated. These provisions 
are but the crystallization of immemorial practice 
among nations. Kriege, German delegate to that 
Hague Conference, declared during the proceedings 
that: 

"Neutral states are not bound to forbid their sub- 
jects to engage in a commerce which from the point 
of view of belligerents must be considered illicit." 

As for our rights in the matter, they are not les- 
sened by the fact that 20,000,000 or more of our 
people are of German and Austrian descent, and that 
all of the ammunition is being used against their 
brothers in Europe. Our rights are not lessened, nor 



302 ECONOMIC ASPECTS OF THE WAR 

our neutrality impaired by the circumstance that 
only one of the belligerents can get our supplies. We 
are willing to sell to both ; but only England can send 
its ships to take away what it buys. England's 
advantage is an incident of its sea power and we are 
under no obligation to deprive it of the advantage 
which its sea power confers. We have repeatedly in 
the past refused to lay arms embargoes at the request 
of belligerents- who were suffering by our war 
exports. All our arms embargoes in the past have 
been at times of national peril when it was necessary 
to conserve our supplies for the home defense; or 
embargoes for the purpose of discouraging civil 
contentions in near-by Latin American countries, like 
Mexico and San Domingo. There is no doubt, the 
rights and the precedents in the matter are with us. 

It is rather upon grounds of humanity that many 
American neutrals stand with the German sympa- 
thizers in this country in the demand that the arms 
export cease. They cannot reconcile our peace con- 
ferences and our peace propaganda with the creation 
of perhaps the greatest arms industry the world has 
ever seen. The war might have been over months ago 
if we had refused to send ammunition. To be sure, it 
might have been over to the advantage of the pre- 
pared Germans, but is it the business of a neutral to 
worry which side wins the war? Is not German pre- 
paredness an advantage which we are in no way 
obligated to compensate? 

There are some features of this mushroom ammuni- 
tion business that are not attractive. Hotels in New 



WAR ORDERS 303 

York swarm with brokers soliciting orders from 
foreign buyers and native producers. Graft and 
bribery necessarily follow the huge profits in these 
contracts. We hear strange rumors of attempts to 
bribe government officials to sell at exorbitant prices 
discarded Krag-Jorgensen rifles. It is as if a new 
gold field were discovered. 

Some of the up-to-date methods of booming the 
ammunition trade are less attractive than business- 
like. On May 6, 1915, the Cleveland Automatic 
Machine Company published a double page adver- 
tisement in the American Machinist. It announced 
a special lathe for making a high explosive shell. On 
one page was given a cut of the lathe and a cross- 
section of the shell that it made. On the other page 
is a description of the shell's peculiar properties. 

"The material is high in tensile strength and Very 
Special and has a tendency to fracture into small 
pieces upon the explosion of the shell. The timing of 
the fuse for this shell is similar to the shrapnel shell, 
but it differs in that two explosive acids are used to 
explode the shell in the large cavity. The combina- 
tion of these two acids causes terrific explosion, hav- 
ing more power than anything of its kind yet used. 
Fragments become coated with these acids in explod- 
ing and wounds caused by them mean death in ter- 
rible agony within four hours if not attended to imme- 
diately. 

"From what we are able to learn of conditions in 
the trenches, it is not possible to get medical assist- 
ance to anyone in time to prevent fatal results. It 
is necessary immediately to cauterize the wound if 
in the body or head, or to amputate if in the limbs, as 



304 ECONOMIC ASPECTS OF THE WAR 

there seems to be no antidote that will counteract the 
poison. 

"It can be seen from this that this shell is more 
effective than the regular shrapnel, since the wounds 
caused by shrapnel balls and fragments in the mus- 
cles are not as dangerous, as they have no poisonous 
element making prompt attention necessary." 

It is easy to be shocked by this frank exposition of 
the death-dealing qualities of an American product. 
But, after all, this is a perfectly logical advertise- 
ment. People are buying shells to kill ; therefore the 
killing qualities of the shells are the qualities to put 
forward. The advertisement is not directed to the 
general public, but to the makers and buyers of 
shells. Makers, if sensible, will make this type of 
shell. Buyers, if they are wise, will insist upon this 
Very Special product in their specifications. 

Yet, in spite of all sentimental talk against the 
export of arms, our right to export them cannot be 
denied or even logically disputed. The pound of 
flesh is ours. What is more, the law of Venice not 
only allows us but compels us to take it. In the pre- 
amble to the 1907 Hague Convention we read: 

"The rules impartially adopted by the neutral 
powers shall not be altered in principle during the 
course of the war by one of the neutrals, except in the 
case where experience, shows the necessity for such 
action in order to safeguard the nation's rights." 

It was this to which the President referred in his 
note to Ambassador Bernstorff, explaining that to 



WAR ORDERS 305 

place an arms embargo in the middle of the war 
would be a violation of our neutrality. 

There are some tangible advantages that we shall 
gain from a continuation of the arms industry. 
Besides employing men in the machine shops who 
would otherwise be out of work, we are training a 
large number of mechanics in the rapid production 
of the weapons of war. They would be a great asset 
to us in any war in which we might have to engage in 
the future. Every war of the future will be still more 
an artillery war than the present. As a French 
senator says, "the problem is to industrialize war." 
We are industrializing war. The plants and the 
men we shall have, trained and ready at the end of 
this conflict, may be worth to us fifty army corps. 
They will be worth this to us not only in the unhappy 
event of war, but also a known reserve power with 
which to prevent war. 

It is frequently said that we must continue our 
arms exports because we cannot afford to aid in 
establishing the principle that belligerents in war 
time shall not get arms from a neutral. Such a prin- 
ciple, it is said, would condemn to helplessness an 
unprepared nation attacked by a prepared aggres- 
sor. The unprepared would be unable to turn to 
neutrals for arms with which to defend itself. 

The argument is sound on general lines, but it 
has no value when applied specifically to us. In any 
future war we need fear only a European or Asiatic 
aggressor, separated from us by a wide expanse of 
ocean. As a possible supplier of arms, we can think 



306 ECONOMIC ASPECTS OP THE WAR 

only of one of the nations of western Europe or 
Japan. No one else makes them. If we in that war 
cannot command the seas, obviously we shall get no 
arms or ammunition. If we in that war command 
the seas, we shall need no aid in arming ourselves. 
No one can reach us. Surely our former arms manu- 
facturing facilities, expanded as they have been by 
the European War, will suffice to keep the navy and 
the coast defenses supplied with shells. If before 
the war breaks out we have not enough ammunition 
for the regular army to repel a surprise landing, we 
can hardly expect our opponent to politely wait until 
we go abroad and bring it back. 

The real arguments for continuing the manu- 
facture of arms for the Allies are that it is to our 
present commercial and military interest so to con- 
tinue, and that it is our duty as a neutral to do so. 
England would justly accuse us of unneutrality, if 
without reason, in the midst of the war, we ceased the 
shipments of arms which our government had publicly 
approved and upon which, relying on the given word 
of our government, the Allies have become dependent. 
There is no doubt that, whatever our personal senti- 
ments, our official actions up to this point have im- 
posed upon us some obligations in the matter. 

Upon only one condition can we withdraw from the 
fulfillment of those obligations, namely, 

"In the case where experience shows the necessity 
for such action in order to safeguard a nation's 
rights." 



WAR ORDERS 307 

If we are ever to learn by experience, we have 
learned that some action is necessary in order to safe- 
guard our nation's rights. In two strong notes of 
protest to Great Britain, we stated her violations of 
our rights. She prevents us from shipping non- 
contraband to Germany and receiving any goods 
from Germany at all, in defiance of our right to 
enjoy such trade via neutral countries even if Britain 
were to establish that her blockade of German ports 
is effective. Britain has seriously deranged our trade 
with the little neutral nations of Europe upon the 
suspicion that some of the trade may be going 
through to Germany. We have seen in great detail 
how deeply these violations of our rights affect our 
material interests, how little submission to them 
would accord with our history Or our rank as a lead- 
ing neutral, and how dangerous is such submission 
for our future welfare. 

Therefore, neither Great Britain nor any other 
nation of the world could blame us if we laid an 
embargo upon the exportation of arms for the pur- 
pose of enforcing our right to trade unhindered with 
Germany and the neutral nations of Europe, in all 
but contraband (as defined in a reasonable contra- 
band list) with German destination. Our rights and 
the rights of neutral nations are that international 
law be observed, international law as codified and 
recognized by civilized people in the Declaration of 
London. Now, in the midst of the conflict, there is 
no time to frame a new code. 

The Allies have placed with us somewhere between 



308 ECONOMIC ASPECTS OF THE WAR 

$500,000,000 and $1,000,000,000 of arms and equip- 
ment orders. That is the precise measure of the 
power we have over them. If the United States had 
set out in October to secure a means to force belliger- 
ents to return to the realm of international law, it 
could not have proceeded more wisely than to publish 
its October 15 proclamation assuring this country 
and others of the legitimacy of our arms trade. 

There need be no formal session of Congress to 
declare an arms embargo. The State Department 
need only intimate that the administration is pre- 
pared to call such a session, and the result will be 
attained. A word to the wise, from the wise and the 
powerful, is sufficient. 

Should the impossible happen and should it be 
necessary to declare an arms embargo, the country 
would by no means be plunged into ruin. England 
could not fight us ; that would mean to starve herself. 
In bringing our own armament up to date, our gov- 
ernment could afford to employ the country's arms 
capacity whose contracts with the Allies would be 
broken. 

That is more than impossible. England would 
know that an arms embargo might be followed by a 
food embargo, if necessary to attain our rights. 
These rights are so incontestable and this means of 
attaining them is so in accord with even the letter of 
international law, that a country which has pawned 
with us its military future would not think of losing 
so precious a pledge. 

In every note that Germany has written she has 



WAR ORDERS 309 

emphasized that the submarine campaign is a retalia- 
tion for the unlawful British measures in holding up 
food and raw materials for Germany. When both 
belligerents are breaking the law and each is claim- 
ing the acts of the other as justification, the pressure 
of neutrals must be applied to the one which refuses 
to j oin in a return to law and order. Our problem is 
to compel that joint acceptance of a compromise 
which we proposed in our note to the belligerents in 
February. — Germany is ready for acceptance; the 
pressure must be applied to England. 

With the attainment of this end — the acceptance 
of the Declaration of London and its contraband list 
by England and Germany and the return by Ger- 
many to lawful use of her war vessels — both belli- 
gerents return to the limits of law. Neutral trade 
rights are recovered and established for all time. Our 
excuse for stopping the export of arms ceases. In 
unhindered access to the arms supplies of the oversea 
world, barred to Germany, England enjoys a great 
advantage from her sea power, the only advantage 
which she can be allowed to enjoy without destroying 
the rights of those who have had no part in making 
or prosecuting this war. 



APPENDIX 

President Wilson's Appeal for Impartiality and 
Restraint in Discussing the War 

My Fellow Countrymen: I suppose that every thoughtful 
man in America has asked himself during the last troubled 
weeks what influence the European War may exert upon the 
United States, and I take the liberty of addressing a few 
words to you in order to point out that it is entirely within 
our own choice what its effects upon us will be and to urge 
very earnestly upon you the sort of speech and conduct which 
will best safeguard the nation against distress and disaster. 

The effect of the war upon the United States will depend 
upon what American citizens say or do. Every man who really 
loves America will act and speak in the true spirit of neutrality, 
which is the spirit of impartiality and fairness and friendliness 
to all concerned. The spirit of the nation in this critical 
matter will be determined largely by what individuals and 
society and those gathered in public meetings do and say, 
upon what newspapers and magazines contain, upon what our 
ministers utter in their pulpits and men proclaim as their 
opinions on the streets. 

The people of the United States are drawn from many 
nations, and chiefly from the nations now at war. It is natural 
and inevitable that there, should be the utmost variety of 
sympathy and desire among them with regard to the issues and 
circumstances of the conflict. Some will wish one nation, others 
another, to succeed in the momentous struggle. It will be easy 
to excite passion and difficult to allay it. Those responsible 
for exciting it will assume a heavy responsibility; responsibility 
for no less a thing than that the people of the United States, 
whose love of their country and whose loyalty to its govern- 
ment should unite them as Americans all, bound in honor and 
affection to think first of her and her interests, may be divided 
in camps of hostile opinions, hot against each other, involved 
in the war itself in impulse and opinion, if not in action. Such 
diversions among us would be fatal to our peace of mind and 
might seriously stand in the way of the proper performance 
of our duty as the one great nation at peace, the one people 
holding itself ready to play a part of impartial mediation and 
speak the counsels of peace and accommodation, not as a 
partisan, but as a friend. 



312 ECONOMIC ASPECTS OF THE WAR 

I venture, therefore, my fellow countrymen, to speak a 
solemn word of warning to you against that deepest, most 
subtle, most essential breach of neutrality which may spring 
out of partisanship, out of passionately taking sides. The 
United States must be neutral in fact as well as in name 
during these days that are to try men's souls. We must be 
impartial in thought as well as in action, must put a curb upon 
our sentiments as well as upon every transaction that might 
be construed as a preference of one party to the struggle before 
another. 

My thought is of America. I am speaking, I feel sure, the 
earnest wish and purpose of every thoughtful American that 
this great country of ours, which is, of course, the first in our 
thoughts and in our hearts, should show herself in this time 
of peculiar trial a nation fit beyond others to exhibit the fine 
poise of undisturbed judgment, the dignity of self-control, the 
efficiency of dispassionate action, a nation that neither sits in 
judgment upon others nor is disturbed in her own counsels 
and which keeps herself fit and free to do what is honest and 
disinterested and truly serviceable for the peace of the world. 

Shall we not resolve to put upon ourselves the restraint 
which will bring to our people the happiness and the great 
and lasting influence for peace we covet for them? 

Woodrow Wilson. 
Washington, August 18, 1914. 



British August 20 Order in Council 

Whereas during the present hostilities the naval forces of 
His Majesty will co-operate with the French and Russian naval 
forces; and 

Whereas it is desirable that the naval operations of the 
allied forces so far as they affect neutral ships and commerce 
should be conducted on similar principles; and 

Whereas the governments of France and Russia have in- 
formed His Majesty's government that during the present 
hostilities it is their intention to act in accordance with the 
provisions of the Convention known as the Declaration of 
London, signed on the 26th day of February, 1909, so far as 
may be practicable. 

Now, therefore, His Majesty, by and with the advice of His 
Privy Council, is pleased to order, and it is hereby ordered, 
that during the present hostilities the Convention known as the 
Declaration of London shall, subject to the following additions 
and modifications, be adopted and put in force by His 
Majesty's government as if the same had been ratified by His 
Majesty: 



APPENDIX 313 

The additions and modifications are as follows: 

(1) The lists of absolute and conditional contraband con- 
tained in the Proclamation dated August 4, 1914, shall be 
substituted for the lists contained in Articles 22 and 24 of 
the said Declaration. 

(2) A neutral vessel which succeeded in carrying contraband 
to the enemy with false papers may be detained for having 
carried such contraband if she is encountered before she has 
completed her return voyage. 

(3) The destination referred to in Article 33 may be inferred 
from any sufficient evidence, and (in addition to the pre- 
sumption laid down in Article 34) shall be presumed to exist 
if the goods are consigned to or for an agent of the enemy 
state or to or for a merchant or other person under the 
control of the authorities of the enemy state. 

(4) The existence of a blockade shall be presumed to be 
known — 

(a) to all ships which sailed from or touched at an enemy 
port a sufficient time after the notification of the blockade to 
the local authorities to have enabled the enemy government 
to make known the existence of the blockade; 

(b) to all ships which sailed from or touched at a British 
or allied port after the publication of the declaration of 
blockade. 

(5) Notwithstanding the provisions of Article 35 of the said 
Declaration, conditional contraband, if shown to have the 
destination referred to in Article 33, is liable to capture, 
to whatever port the vessel is bound and at whatever port the 
cargo is to be discharged. 

(6) The General Report of the Drafting Committee on the 
said Declaration presented to the Naval Conference and 
adopted by the conference at the eleventh plenary meeting on 
February 25, 1909, shall be considered by all prize courts as 
an authoritative statement of the meaning and intention of 
the said Declaration, and such courts shall construe and inter- 
pret the provisions of the said Declaration by the light of the 
commentary given therein. 



The British October 29 Order in Council 

1. During the present hostilities the provisions of the 
Convention known as the Declaration of London shall, subject 
to the exclusion of the lists of contraband and non-contraband, 
and to the modification hereinafter set out, be adopted and put 
in force by His Majesty's government. The modifications are 
as follows: 

(I) A neutral vessel, with papers indicating a neutral 
destination, which notwithstanding the destination shown on 



314 ECONOMIC ASPECTS OF THE WAR 

the papers, proceeds to an enemy port, shall be liable to 
capture and condemnation if she is encountered before the 
end of her next voyage. 

(II) The destination referred to in Article 33 of the said 
Declaration shall (in addition to the presumptions laid down 
in Article 34) be presumed to exist if the goods are consigned 
to or for an agent of the enemy state. 

(III) Notwithstanding the provisions of Article 35 of the 
said Declaration, conditional contraband shall be liable to 
capture on board a vessel bound for a neutral port if the 
goods are consigned "to order," or if the ship's papers do not 
show who is the consignee of the goods, or if they show a 
consignee of the goods in territory belonging to or occupied 
by the enemy. 

(IV) In the cases covered by the preceding paragraph (III) 
it shall lie upon the owners of the goods to prove that their 
destination was innocent. 

2. Where it is shown to the satisfaction of one of His 
Majesty's principal Secretaries of State that the enemy gov- 
ernment is drawing supplies for its armed forces from or 
through a neutral country, he may direct that in respect of 
ships bound for a port in that country, Article 35 of the said 
Declaration shall not apply. Such direction shall be notified 
in the London Gazette and shall operate until the same is 
withdrawn. So long as such direction is in force, a vessel 
which is carrying conditional contraband to a port in that 
country shall not be immune from capture. 



The British March 11 Order in Council 

1. No merchant vessel which sailed from her port of 
departure after the first of March, 1915, shall be allowed to 
proceed on her voyage to any German port. 

Unless the vessel receives a pass enabling her to proceed 
to some neutral or allied port to be named in the pass, goods 
on board any such vessel must be discharged in a British port 
and placed in the custody of the marshal of the prize court. 
Goods so discharged, not being contraband of war, shall, if 
not requisitioned for the use of His Majesty, be restored by 
order of the court, upon such terms as the court may in the 
circumstances deem to be just, to the person entitled thereto. 

2. No merchant vessel which sailed from any German port 
after the first of March, 1915, shall be allowed to proceed on her 
voyage with any goods on board laden at such port. 

All goods laden at such port must be discharged in a British 
or allied port. Goods so discharged in a British port shall be 
placed in the custody of the marshal of the prize court, and, 



APPENDIX 315 

if not requisitioned for the use of His Majesty, shall be 
detained or sold under the direction of the prize court. The 
proceeds of goods so sold shall be paid into court and dealt 
with in such a manner as the court may in the circumstances 
deem to be just. 

Provided, that no proceeds of the sale of such goods shall 
be paid out of court until the conclusion of peace, except on 
the application of the proper officer of the crown, unless it be 
shown that the goods had become neutral property before the 
issue of this order. 

Provided also, that nothing herein shall prevent the release 
of neutral property laden at such enemy port on the appli- 
cation of the proper officer of the crown. 

3. Every merchant vessel which sailed from her port of 
departure after the first of March, 1915, on her way to a port, 
other than a German port, carrying goods with an enemy 
destination, or which are enemy property, may be required 
to discharge such goods in a British or allied port. Any goods 
so discharged in a British port shall be placed in the custody 
of the marshal of the prize court, and, unless they are contra- 
band of war, shall, if not requisitioned for the use of His 
Majesty, be restored by order of the court, upon such terms 
as the court may in the circumstances deem to be just to the 
person entitled thereto. 

Provided, that this article shall not apply in any case falling 
within Articles 2 or 4 of this order. 

4. Every merchant vessel which sailed from a port other 
than a German port after the first of March, 1915, having on 
board goods which are of enemy origin or are enemy property 
may be required to discharge such goods in a British or allied 
port. Goods so discharged in a British port shall be placed 
in the custody of the marshal of the prize court, and if not 
requisitioned for the use of His Majesty shall be detained or 
sold under the direction of the prize court. The proceeds of 
goods so sold shall be paid into court and dealt with in such 
manner as the court may in the circumstances deem to be just. 

Provided, that no proceeds of sale of such goods shall be 
paid out of court until the conclusion of peace except on the 
application of the proper officer of the crown, unless it be 
shown that the goods had become neutral property before the 
issue of this order. 

Provided, also, that nothing herein shall prevent the release 
of neutral property of enemy origin on the application of the 
proper officer of the crown. 

5. Any person claiming to be interested in, or to have any 
claim in respect of, any goods (not being contraband of war) 
placed in the custody of the marshal of the prize court under 
this order, or in the proceeds of such goods, may forthwith 
issue a writ in the prize court against the proper officer of the 



316 ECONOMIC ASPECTS OF THE WAR 

crown and apply for an order that the goods should be restored 
to him, or that their proceeds should be paid to him, or for 
such other order as the circumstances of the case may require. 
The practice and procedure of the prize court shall, so far 
as applicable, be followed mutatis mutandis in any proceedings 
consequential upon this order. 

6. A merchant vessel which has cleared for a neutral port 
from a British or allied port, or which has been allowed to 
pass, having an ostensible destination to a neutral port, and 
proceeds to an enemy port, shall, if captured on any subsequent 
voyage, be liable to condemnation. 

7. Nothing in this order shall be deemed to affect the 
liability of any vessel or goods to capture or condemnation 
independently of this order. 

8. Nothing in this order shall prevent the relaxation of the 
provisions of this order in respect of the merchant vessels of 
any country which declares that no commerce intended for or 
originating in Germany or belonging to German subjects 
shall enjoy the protection of its flag. 



Extract from British March 23 Order in Council, 
Revising Rule 29 of the Prize Court and 
empowering England to seize any Neutral 

Vessel 

"Where it is made to appear to the Judge, on the application 
of the proper officers of the court, that it is desired to requisi- 
tion on behalf of His Majesty a ship in respect of which no 
final decree of condemnation has been made, he shall order 
that the ship shall be appraised, and that upon an undertaking 
being given in accordance with Rule 5 of this order, the ship 
shall be released and delivered to the crown. 



United States Note presented jointly to Britain 
and Germany, February 20, suggesting Modi- 
fications in the Severity of their War at 
Sea 

"In view of the correspondence which has passed between 
this government and Great Britain and Germany respectively 
relative to the declaration of a war zone by the German Ad- 



APPENDIX 317 

miralty, and the use of neutral flags by British merchant 
vessels, this government ventures to express the hope that the 
two belligerent governments may, through reciprocal conces- 
sions, find a basis for agreement which will relieve neutral 
vessels engaged in peaceful commerce from the great dangers 
which they will incur on the high seas adjacent to the coasts 
of the belligerents. 

"The government of the United States respectfully suggests 
that an agreement in terms like the following might be entered 
into. This suggestion is not to be regarded as in any sense 
a proposal made by this government, for it of course fully 
recognizes that it is not its privilege to propose terms of agree- 
ment between Great Britain and Germany, even though the 
matter be one in which it and the people of the United States 
are directly and deeply interested. It is merely venturing to 
take the liberty which it hopes may be accorded a sincere 
friend desirous of embarrassing neither nation involved, and 
of serving, if it may, the common interests of humanity. The 
course outlined is offered in the hope that it may draw forth 
the views and elicit the suggestions of the British and German 
governments on a matter of capital interest to the whole 
world. 

"Germany and Great Britain to agree: — 

"First. That neither will sow any floating mines, whether 
upon the high seas or in territorial waters; that neither will 
plant on the high seas anchored mines except within cannon 
range of harbors for defensive purposes only; and that all 
mines shall bear the stamp of the government planting them, 
and be so constructed as to become harmless if separated from 
their moorings. 

"Second. That neither will use submarines to attack mer- 
chant vessels of any nationality except to enforce the right 
of visit and search. 

"Third. That each will require their respective merchant 
vessels not to use neutral flags for the purpose of disguise or 
ruse de guerre. 

"Germany to agree: — 

"That all importations of food or foodstuffs from the United 
States (and from such other neutral countries as may ask it) 
into Germany shall be consigned to agencies to be designated 
by the United States government ; that these American agencies 
shall have entire charge and control, without interference on 
the part of the German government, of the receipt and dis- 
tribution of such importations, and shall distribute them solely 
to retail dealers bearing licenses from the German government 
entitling them to receive and furnish such food and foodstuffs 
to non-combatants only; that any violation of the terms of 
the retailers' licenses shall work a forfeiture of their rights 



318 ECONOMIC ASPECTS OF THE WAR 

to receive such food and foodstuffs for this purpose; and that 
such food and foodstuffs will not be requisitioned by the 
German government for any purpose whatsoever or be diverted 
to the use of the armed forces of Germany. 

"Great Britain to agree: — 

"That food and foodstuffs will not be placed upon the abso- 
lute contraband list, and that shipments of such commodities 
will not be interfered with or detained by British authorities 
if consigned to agencies designated by the United States 
government in Germany for the receipt and distribution of 
such cargoes to licensed German retailers for distribution solely 
to the non-combatant population. 

"In submitting this proposed basis of agreement this govern- 
ment does not wish to be understood as admitting or denying 
any belligerent or neutral right established by the principles 
of international law, but would consider the agreement, if 
acceptable to the interested Powers, a modus Vivendi, based 
upon expediency rather than legal right, and as not binding 
upon the United States either in its present form or in a 
modified form until accepted by this government." 



Letter of President Jefferson to Thomas Pinckney, 
United States Minister to England, regard- 
ing England's Stoppage of our Food Ship- 
ments to France 

Philadelphia, September 7, 1793. 

Sir: — We have received, through a channel which cannot be 
considered as authentic, the copy of a paper, styled "Addi- 
tional Instructions to the Commanders of His Majesty's Ships 
of War and Privateers," &c, dated at St. James, June 8, 1793. 
If this paper be authentic, I have little doubt but that you will 
have taken measures to forward it to me. But as your commu- 
nication of it may miscarry, and time in the meanwhile will be 
lost, it has been thought better that it should be supposed 
authentic and that on that supposition I should notice to you 
its very exceptional nature, and the necessity of obtaining 
explanations on the subject from the British government; 
desiring at the same time that you will consider this letter as 
provisionally written only, and as if never written, in the event 
that the paper which is the occasion of it be not genuine. 



APPENDIX 319 

The first article of it (the British Order) permits all vessels 
laden wholly or in part with corn, flour, or meal, bound to any 
port in France to be stopped and sent into any British port, 
to be purchased by that government, or to be released only on 
the condition of security given by the master that he will pro-' 
ceed to dispose of his cargo in the ports of some country in 
amity with His Majesty. 

This article is so manifestly contrary to the law of nations 
that nothing more would seem necessary than to observe that 
it is so. Reason and usage have established that when two 
nations go to war, those who choose to live in peace retain their 
natural right to pursue their agriculture, manufactures, and 
other ordinary vocations, to carry the produce of their industry 
for exchange to all nations, belligerent or neutral, as usual, to 
go and come freely without injury or molestation, and, in 
short, that the war among others shall be for them as if it did 
not exist. One restriction on their natural rights has been 
submitted to by nations at peace; that is to say, that of not 
furnishing to either party implements merely of war for the 
annoyance of the other, nor anything whatever to a place 
blockaded by its enemy. 

What these implements of war are has been so often agreed 
and is so well understood as to leave little question about 
them at this day. There does not exist, perhaps, a nation in 
our common hemisphere, which has not made a particular 
enumeration of them in some or all of their treaties, under the 
name of contraband. It suffices for the present occasion to 
say that corn, flour, and meal are not of the class of contra- 
band, and, consequently, remain articles of free commerce. 
A culture which, like that of the soil, gives employment to such 
a proportion of mankind, could never be suspended by the 
whole earth or interrupted for them, whenever any two nations 
should think proper to go to war. 

The state of war then existing between Great Britain and 
France furnishes no legitimate right either to interrupt the 
agriculture of the United States or the peaceable exchange of 
its produce with all nations, and consequently the assumption 
of it will be as lawful hereafter as now, in peace as in war. 
No ground, acknowledged by the common reason of mankind, 
authorizes this act now, and unacknowledged ground may be 
taken at any time and at all times. 

We see then a practice begun to which no time, no circum- 
stances, prescribe any limits, and which strikes at the root of 
our agriculture, that branch of industry which gives food, 
clothing, and comfort to the great mass of the inhabitants of 
these states. If any nation whatever has a right to shut up to 
our produce all the ports of the earth except her own and 
those of her friends she may shut up these also and so confine 
us within our own limits. No nation can subscribe to such 



320 ECONOMIC ASPECTS OF THE WAR 

pretensions; no nation can agree, at the mere will or interest of 
another, to have its peaceable industry suspended and its citi- 
zens reduced to idleness and want. The loss of our produce 
destined for foreign markets, or that loss which would result 
from an arbitrary restraint of our markets, is a tax too serious 
for us to acquiesce in. It is not enough for a nation to say 
we and our friends will buy your produce. We have a right 
to answer that it suits us better to sell to their enemies as 
well as their friends. Our ships do not go to France to return 
empty. They go to exchange the surplus of one produce which 
we can spare for surpluses of other kinds which they can 
spare and we want; which they furnish on better terms, and 
more to our mind, than Great Britain or her friends. 

We have a right to judge for ourselves what market best 
suits us and they have none to forbid to us the enjoyment of 
the necessaries and comforts which we may obtain from any 
other independent country. 

This act, too, tends directly to draw us from that state of 
peace in which we are wishing to remain. It is an essential 
character of neutrality to furnish no aids (not stipulated by 
treaty) to one party which we are not equally ready to furnish 
to the other. If we permit com to be sent to Great Britain 
and her friends, we are equally bound to permit it to France. 
To restrain it would be a partiality which might lead to a war 
with France, and between restraining it ourselves and permit- 
ting her enemies to restrain it unrightfully is not difference. 
She would consider this as a mere pretext, of which she would 
not be the dupe; and on what honorable ground could we 
otherwise explain it? Thus we should see ourselves plunged 
by this unauthorized act of Great Britain into a war with 
which we meddle not, and which we wish to avoid if justice 
to all parties and from all parties will enable us to avoid it. 
In the case where we found ourselves obliged by treaty to 
withhold from the enemies of France the right of arming in 
our ports, we thought ourselves in justice bound to withhold 
the same right from France also, and we did it. 

Were we to withhold from her (France) supplies of pro- 
visions, we should in like manner be bound to withhold them 
from her enemies also, and thus shut to ourselves all the ports 
of Europe where corn is in demand or make ourselves parties 
in the war. This is a dilemma which Great Britain has no 
right to force upon us, and for which no pretext can be found 
in any part of our conduct. She may, indeed, feel the desire 
of starving an enemy nation, but she can have no right of doing 
it at our loss nor of making us the instruments of it. 

The President therefore desires that you will immediately 
enter into explanations on this subject with the British govern- 
ment. Lay before them in friendly and temperate terms all 
the demonstrations of the injury done us by this act, and 



APPENDIX 321 

endeavor to obtain a revocation of it and full indemnification 
to any citizens of these states who may have suffered by it in 
the meantime. Accompany your representations by every 
assurance of our earnest desire to live on terms of the best 
friendship and harmony with them and to found our expecta- 
tions of justice on their part on a strict observance of it on 
ours. 

It is with concern, however, I am obliged to observe that so 
marked has been the inattention of the British court to every 
application which has been made to them on any subject by 
this government (not a single answer I believe having ever 
been given to one of them, except in the act of exchanging 
a minister), that it may become unavoidable, in certain cases, 
where an answer of some sort is necessary, to consider their 
silence as an answer. Perhaps this is their intention. Still, 
however, desirous of furnishing no color of offense, we do not 
wish you to name to them any term for giving an answer. 
Urge one as much as you can without commitment, and on 
the first day of December be so good as to give us information 
of the state in which this matter is, that it may be received 
during the session of Congress. . . . 

Whether these explanations with the British government 
shall be verbal or in writing, is left to yourself. Verbal com- 
munications are very insecure; for it is only to deny them or 
to change their terms, in order to do away their effect at any 
time. Those in writing have as many arid Obvious advantages, 
and ought to be preferred, unless there be obstacles of which 
we are not apprized. 

I have the honor to be, with great and sincere esteem, dear 
sir, your most obedient servant. 



Minority Report of the Committee on Merchant 
Marine of the United States Chamber of 
Commerce, Favoring the Ship Purchase Bill 

I dissent from the views of the majority of this Committee, 
and approve of the Ship Purchase Bill now before Congress. 

The emergency is such that the ordinary arguments against 
the government entering the field of private business do not 
apply. 

The emergency is the re-establishment, or the maintenance, 
of our trade communication with neutral and belligerent Euro- 
pean countries which are our chief markets and sources of 
supply. 

I conceive that the chief task confronting us today is to 



322 ECONOMIC ASPECTS OF THE WAR 

uphold, as against all belligerents, the rights of our merchants 
to the peaceful pursuit of commerce of all sorts, uninterrupted 
excepting for contraband of war sent to belligerents. This is 
the principle for which this country has fought successfully at 
recent international conferences. 

This principle is being increasingly violated by belligerents 
in the present war. I apprehend that vessels owned by the 
United States Government will have a standing that will compel 
respect by all belligerents. There can be no question of the 
good faith in which they were purchased, no matter what the 
source. It can be guaranteed that they carry no contraband. 
All excuse for interfering with the commerce they carry will 
be removed. 

As a theory, government ownership of merchant vessels is 
wrong. As a measure to meet the present economic emergency, 
it is justified and right. 

(Signed) E. J. Clapp. 

February 1, 1915. 



Declaration which American Associate Members of 
the Liverpool Cotton Exchange were asked 
to Sign 

Declaration 

I, of , an Associate Member of 

the Liverpool Cotton Association, do solemnly and sincerely 
declare that neither I nor my firm nor any partner in the same 
nor any branch house or other firm or firms in which I or any 
one of my partners may be directly or indirectly pecuniarily 
interested will trade or have dealings with any person or a 
member or representative of any firm or person domiciled or 
carrying on business in any state at present at war with His 
Britannic Majesty until such time as peace may have been 
declared, and I further undertake when trading with subjects 
of neutral countries to make all necessary enquiries in order 
to satisfy myself as to the ultimate destination of the goods 
and that none of them are intended for consumption in or for 
transit through any state at war with His Majesty. 

Declared this day of 

Witness 

Address of Witness 



APPENDIX 



323 



Record of British Detentions of American Copper 
Exports to Neutrals, Autumn, 1914 



British Detentions of Copper Destined for Italy, 
Octorer to Novemher, 1914 













Copper 






Destina 






Cargo 


Ship 


Nationality 


tion 


Sailed 


Seized (tons) 


Ascot 


British 


Italy 


Oct. 


10 


Oct. 26 1340 


Palermo 


Italian 


" 


Oct. 


20 


Nov. 2 300 


Regina d' Italia 


i t 




Oct. 


15 


Oct. 26 1180 


Italia 


a 




Oct. 


24 


Nov. 8 900 


Kroonland 


American 




Oct. 


15 


Nov. 8 1300 


San Giovanni 


Italian 




Oct. 


14. 


Oct. 26 550 


Duca di Genoa 


a 




Oct. 


17 


Nov. 8 300 


Verona 


(0 




Oct. 


24 


Nov. 8 325 


Europa 


ii 




Oct. 


21 


Nov. 8 300 


San Guglielmo 


ii 




Oct. 


21 


Nov. 8 700 


Tabor 


Norwegian 




Oct. 


26 


Nov. 13 1020 


Taurus 


American 




Nov. 


1 


Nov. 13 400 


Perugia 


British 




Nov. 


1 


Nov. 13 515 


Norheim 


Norwegian 




Oct. 


17 


Nov. 18 425 




Total 9555 












21,403,200 lbs. 



British Detentions of Copper Destined to Sweden 
(and Norway) 











Copper 






Destina- 






Cargo 


Ship 


Nationality 


tion 


Sailed 


Seized 


'tons) 


Sif 




Sweden 


Oct. 31 


Nov. 18 


400 




Sigrum 


Norwegian 




Nov. 8 


Nov. 26 


450 


Ran 


Swedish 




Nov. 13 


Dec. 1 


650 


Antones 


Norwegian 




Oct. 22 


Nov. 14 


650 


Tyr 


1 1 




Oct. 29 


Nov. 19 


750 


Francisco 


British 




Oct. 17 


Nov. 2 


200 


Idaho 


n 




Oct. 24 


Nov. 10 


200 


Toronto 


a 




Oct. 31 


Nov. 15 


200 


Marengo 


«< 




Oct. 10 


Oct. 25 


200 


Galileo 


tt 




Nov. 7 


Nov. 26 


200 


New Sweden 


Swedish 




Dec. 6 


Dec. 28 


730 


Soerland 


Norwegian 




Nov. 27 


Dec. 28 


600 


Canton 


Swedish 




Nov. 12 


Dec. 1 
Total 


375 




5605 










12,555,200 lbs. 



324 ECONOMIC ASPECTS OF THE WAR 

Copper Agreement between United States Export- 
ers and British Admiralty 

Copper from United States of America to Neutral Countries 

"Whilst His Majesty's Government are at present, so far as 
they are. able, preventing any copper from reaching their 
enemies, they have no desire to interfere in any way with the 
sales of the United States copper producers to purchasers in 
neutral countries which are willing to guarantee that the copper 
which they import is for the consumption of those neutral 
countries. 

"If the United States producers would be willing to co-op- 
erate, His Majesty's Government will not interfere with their 
copper shipments to those -neutral countries which have placed 
copper on their prohibition list, and whose prohibitions of 
export are found to be effective. 

"Whilst His Majesty's Government cannot abandon in any 
way their Tight to search vessels, they will be quite willing to 
allow to proceed to its destination all copper which is to be 
sold only to named consumers, and not to merchants, dealers 
or forwarding agents, in such neutral countries as have placed 
copper and articles manufactured mainly of copper on their 
list of prohibited exports, provided that a copy of the contract 
of sale is sent to the director of the Trade Division at the 
Admiralty, and it shall contain a clause to the effect that 
neither the copper itself nor any of its products shall be 
exported. Such copper upon arriving at its destination shall 
be put into warehouse, so that it cannot afterwards be declared 
in transit. The bill of lading must show clearly the name of 
the actual consumer, or of a recognized London merchant, or 
the name of a banker who shall be approved by His Majesty's 
Government. 

"It is agreed that the undersigned will not export copper 
to Sweden, Norway, Denmark or Italy, except in compliance 
with, and subject to, the conditions of Article 3 hereof, and 
that it (the undersigned company) will not export copper to 
other neutral countries except subject to permit of British 
Admiralty. 

"Shipments of copper to Great Britain or her allies may be 
made without restriction. 

"All sale contracts for neutral countries to be forwarded to 
the British Admiralty, either through its London representa- 
tives or through His Britannic Majesty's Consul at the port 
of New York. 

"Shipments of copper against contracts entered into previous 
to the signing of this agreement and any existing f. o. b. con- 
tracts are exempt from its provisions. 

"We will be prepared to conform to the different provisions 



APPENDIX 325 

set forth in the above regulations of the Admiralty as regards 
shipments of copper from the U. S. A. to neutral countries, 
and we assent to the terms of the letter of January 2, 1915, 
from Richard Webb, Director of Trade Division, to Messrs. 
C. S. Henry & Company, Ltd., a copy of which letter, marked 
Exhibit 'A', is attached hereto." 

Blank Company 



Statement Issued by British Embassy at Washing- 
ton, May 3, 1915, telling American Shippers 
how to Export to European Neutral Coun- 
tries 

"The British Embassy have received since the issue of the 
Order in Council of March 11 numerous applications from 
shippers of American produce for information and advice on 
general lines as to the steps which ought to be taken by them 
to facilitate the quicker expedition and passage of consign- 
ments of goods to neutral designations for neutral consumption. 

"The British Embassy can give no assurance' as to the im- 
munity from visit and search or detention of any particular 
shipments, but with regard to consignments of non-contraband 
articles as well as of articles of conditional contraband, they 
are authorized to state that in cases where adequate information 
is furnished by consignors to show that the goods shipped are 
neutral property and are to be used exclusively for consumption 
in neutral countries or by the Allies, this will be taken into 
consideration by the authorities charged with the execution 
of the Order in Council. This will also apply to shipments of 
certain descriptions of goods listed as absolute contraband. 
Such goods are, however, usually subjected to closer scrutiny 
and control, and in some cases to special arrangements. 

"It would greatly facilitate and expedite the work of clearing 
vessels bound to neutral ports, which call at or are brought 
into British ports for examination of their papers, if shipping 
houses or their agents would give British consular officers a 
duplicate of the final manifest of the vessel immediately on 
its departure for Europe in order that, if possible, it may be 
transmitted to the British authorities in London in time for it 
to be received and considered before the vessel arrives. 

"To further accelerate proceedings, manifests and bills of 
lading should disclose the exact nature of the goods and 
wherever it is possible the name and full business address of 
the ultimate consignee as well as the name and address of the 
consignor. 



326 ECONOMIC ASPECTS OF THE WAR 

"Shippers would avoid the use of generic descriptions such as 
hardware, dry salteries, machinery, &c, which are capable of 
being employed to conceal the real identity of goods classed 
as contraband. An exact definition of the specific character 
of consignments will save delay in their examination. It will 
also facilitate their identification with the articles comprised 
in the export embargo — lists of the country to which the 
goods are consigned. For example, in the case of lubricating 
oils, it should always be stated whether the oil is vegetable or 
mineral. The precise nature of animal and vegetable fats and 
oils should also be indicated. The term 'lard,' alone, for in- 
stance, is not adequate without some closer definition, because 
the lists of prohibited exports of certain neutral countries 
differentiate between various preparations and compounds of 
this article. 

"It should be clearly understood that the forwarding of 
goods to a neutral port is not proof that they are destined 
for neutral consumption. Consignors should always endeavor 
to procure and exhibit complete information as to the final 
destination of the goods. Shipments manifested 'to order' or 
'in transit,' or with bills of lading addressed to a branch or 
agency of the consignors, or to 'commission agents,' 'banks' or 
'forwarding houses' for account of an unnamed consignee, 
afford no evidence as to their ultimate destination. Wherever 
it is practicable, the full name and address of the ultimate 
consignee should figure in the documents relative to the goods 
concerned, and metals should, so far as possible, be addressed 
to the actual consumers and not to dealers. 

"In connection with the establishment of proof of ultimate 
destination, it may be observed that if goods definitely ad- 
dressed to a neutral consignee can be clearly identified as being 
comprised in the export embargo list of the country to which 
they are consigned, this will be taken into consideration as 
corroborative evidence of their destinations for neutral con- 
sumption. Precision in describing goods will accordingly accel- 
erate comparison with the lists of prohibited exports of neutral 
countries, and in the case of shipments to Sweden it would 
further hasten proceedings if the corresponding number of 
articles in the British tariff were always given in addition to 
the description of the goods. Certificates of final destination 
issued by the official representatives of the country concerned 
will be accepted as collateral evidence that the goods are for 
neutral use. 

"In all arrangements which may be made for shipments of 
goods under the supervision of British Consular authorities, 
it should be clearly understood that the right of visit and search 
or detention is not waived, but that the operations of verifica- 
tion which may be called for by the proximity of the countries 
of destination to Germany is simplified and expedited if con- 



APPENDIX 327 

sular supervision has taken place and if full details are fur- 
nished. 

"With regard to shipments to the Netherlands, wheat and 
wheat flour and meal destined for consumption in that country 
should be consigned to the Netherlands government, and all 
other articles on the British contraband lists, as well as cocoa, 
coffee and tobacco, destined for consumption in that country, 
should be consigned to the Netherlands Overseas Trust. 

"Information as to the description of goods included in the 
British lists of absolute and conditional contraband will be 
furnished on application to any British Consul. 

"The foregoing recommendations are offered for the assist- 
ance of shippers, and compliance with them will materially 
hasten the expedition and passage of cargoes in cases where 
there is no further information at the disposal of the authori- 
ties of a nature to throw doubt on the neutral character of the 
goods or their neutral destination." 



Circular Letter sent to American Importers in 
April by Foreign Trade Advisers of the State 
Department, Explaining that the Foreign 
Trade Advisers will present to the British 
Ambassador requests from United States 
Importers to let their Goods pass the British 
Blockade, on the ground that, the Goods 
were bought and paid for before march 1 

The following note has been received from the British 
Embassy at this capital relative to the movement of American- 
owned goods now in Germany to this country: 

"The British Embassy are authorized to state that in cases 
where a merchant vessel sails from a port other than a German 
port carrying goods of enemy origin for which American 
importers claim to have made payment prior to March 1, 1915, 
proofs that such goods were paid for before March 1 may 
be submitted for examination to the Embassy. If such proofs 
are presented at a sufficiently early stage to enable the report 
thereon to be communicated in time to the British authorities, 
the results of the investigation will be taken into account and 
due weight attached to them in deciding whether the goods 
concerned should be discharged under the provisions of 
Article IV of the Order in Council of March 11." 

On March 30, 1915, the government of the United States 
replied to the British Orders in Council assuming that the 



328 ECONOMIC ASPECTS OF THE WAR 

British government will not deny the rule that innocent ship- 
ments may be freely transported to and from the United 
States through neutral countries to belligerent territory with- 
out being subject to the penalties of contraband traffic or 
breach of blockade, much less to detention, requisition or con- 
fiscation, and that this would of course include all outward- 
bound traffic from the neutral country and all inward-bound 
traffic to the neutral country except contraband in transit to 
the enemy. 

While the government of the United States cannot in any 
way lend its aid in an official and formal manner to procuring 
American-owned goods now in Germany for the importers of 
the United States which would in the slightest degree amount 
to a recognition of the position of Great Britain in respect 
to non-contraband goods, especially from neutral ports, the 
Office of the Foreign Trade Advisers of the Department will 
aid informally American importers who desire to present proof 
of ownership of American goods in Germany for which Ameri- 
can importers claim to have made payment prior to March 1, 
1915. 

You are therefore advised that if you desire to submit proofs 
of your ownership of goods, paid for before March 1, for 
examination by the British Embassy, you may forward such 
evidence as you have to the Foreign Trade Advisers of the 
Department of State. In doing so, it is suggested that you 
incorporate with the evidence of ownership and payment 
information in the following order: 

1. A history of the case, showing dates of payment, nature 
of the goods bought, location of goods at the present, date 
when they reached their present location, name of steamer on 
which it is desired to ship such goods, date of sailing of such 
steamer and all further information pertaining to origin, pay- 
ment, and shipment of goods in your possession. 

2. Original bank drafts or evidence of transfer of money 
from this country to belligerent country, verified by bank 
officials if possible. 

3. (Paragraph cancelled.) 

4. Invoices of goods and such other evidence as will prove 
the identity of the goods with those actually paid for. 

5. Such other and further information in regard to the 
shipment of goods and payment therefor as will be pertinent 
and corroborative. 

This evidence will be collated and presented to the British 
Embassy for communication to the British authorities. In 
presenting this evidence the Foreign Trade Advisers will act 
unofficially as your representatives and with the understanding 
that in so doing the Department does not recognize the posi- 
tion of the British government under Article IV of the Order 
in Council of March 11 or any other article contained in the 



APPENDIX 329 

Orders in Council, but the unofficial aid of the Foreign Trade 
Advisers is given merely to facilitate the shipments of 
American-owned goods of belligerent origin. 

Very truly yours, 

Robert F. Rose, 
"William B. Fleming, 

Foreign Trade Advisers. 



INDEX 



Absolute contraband. 
See: Contraband. 

Agricultural production of 
Germany, growth of, 
271. 

American Machinist, adver- 
tisement regarding ex- 
plosives, 303. 

Ammunition, England's con- 
trol of copper means 
control of, 194. 
See also: Munitions and 
Explosives. 

Artillery. 

See: Explosives. 

Asquith, Premier, foreshad- 
ows blockade, 150. 
answers inquiries as to 
British coal exports to 
Holland, etc., 197. 

Automobiles, commercial in- 
crease in exports of, 215. 

Balance of trade during war 

months, 210. 
Balfour, on the legality of 

the British blockade, 

108. 
Baltic ports of Germany, 

our rights to ship to, 

177. 
See also: Blockade. 
Belgium, food purchases for, 

33. 
Belligerent rights defined, 6. 
Belligerents, right to trade 

with, according to State 

Department, 37. 
Benzol, substitute for gaso- 
line, 287. 



Beresford, Lord, questions 
Asquith regarding pros- 
pective blockade, 151. 

Bermuda cases, cited by 
England, 177. 
cited in British July 23 
note, 89. 

Bernstorff, Count, guaran- 
tees imported food will 
not reach military, 62. 
complains of exports of 

hydro-aeroplanes, 296. 
memorandum of, in De- 
cember, 295. 
memorandum regarding 
ammunition exports, 299, 
300. 

Bethlehem Steel Co., pro- 
posed exports of sub- 
marines to England, 295. 

Bismarck, establishes pro- 
tective tariff for food- 
stuffs, 270. 
establishes protective tariff 

for industries, 268. 
on right to intercept food- 
stuffs, 82. 

Blockade, does not affect all 
neutrals, 88, 106, 108, 
177. 
effect of, in creating un- 
desirable precedent, 105. 
of Germany, announced 
by England, 14, 83. 

Boer War, Salisbury's posi- 
tion on foodstuffs dur- 
ing, 41. 

Bread, German measures re- 
stricting consumption 
of, 275. 



332 



INDEX 



Breadstuffs, increase in ex- 
ports of, 212. 

Bremen, high cotton prices 
at, 129. 

Bryan, Secretary, answers 
Senator Stone's com- 
plaint, 297. 

Bryan, Secretary, obtains 
from European neutrals 
export embargoes on 
copper, 189. 

Cable censorship, British 
abuse of, 222. 

Caprivi, on right to intercept 
foodstuffs, 82. 

Certification of U. S. ship- 
ments to neutrals, by 
British consuls, 101. 
See also: Consuls, British. 

China War of 1885 with 
France, rice contraband, 
39. 

Churchill, Winston, praises 
"economic pressure" on 
Germany, 143. 

Cleveland Automatic Ma- 
chine Co., advertisement 
regarding explosives, 
303. 

Clothing, war, increase in 
exports of, 215. 

Coal, British, exports to 
Holland and Scandi- 
navia, 196. 

Colquitt, Gov., complains of 
England, 144. 

Compulsion, need of, to en- 
force law, 3. 

Conditional contraband. 
See: Contraband. 

Confiscation Decree, of Ger- 
many, affecting grain 
and flour, 61, 274. 

Consuls, British, certify U. 
S. shipments to neutrals, 
101. 

"Continuous voyage," dis- 
cussion of principle of, 
177. 



Contraband, absolute, j us- 
tice of considering cop- 
per as, 181. 

absolute, j ustification of 
considering petroleum 
as, 286. 

absolute, j ustification of 
considering rubber as, 
232. 

as defined in Declaration 
of London, 21. 

attitude of Britain to- 
wards, as a neutral, 183. 

conditional, right to move 
to Germany indirectly, 
24, 180. 

conditional, abolished by 
October Order in Coun- 
cil, 47. 

conditional, treatment of 
under August Order in 
Council, 23. 

copper as absolute, 182. 

copper as conditional, 175. 

cotton to be declared, 132, 
147-149, 160, 167. 

lists, British and German, 
extension of, 13. 

lists, fear of shippers re- 
garding extension of, 26. 

lists of Declaration of 
London, 10. 
Copper agreement, offered 
by Gardner to U. S. 
producers on behalf of 
Admiralty, 192. 

accepted by U. S. pro- 
ducers, 205. 
Copper, as contraband, ef- 
fect on American work- 
men, 186, 208. 

Britain will let neutrals 
have normal quantity 
of, 194. 

British takings of, 195. 

declared absolute contra- 
band, 182. 

declared conditional con- 
traband, 175. 



INDEX 



333 



Copper, exports, decrease in, 
during war, 217. 

export embargoes on, is- 
sued by European neu- 
trals, 188. 

exports to countries adja- 
cent to Germany, 172, 3. 

exports to Holland, Brit- 
ish measures regarding, 
174. 

exports, importance to U. 
S., 169. 

exports for Sweden de- 
tained by England, 182. 

Italy's need for, 189, 194. 

prices, before and after 
outbreak of war, 171. 

reported concealment of, 
in ships' cargoes, 198. 

shipments, "to order," 197. 

stock of, in Germany, 206. 

takings of England, 172. 

under declaration of Lon- 
don, 172. 
Corn Exchange, London, 
wants to export to Hol- 
land, 28. 
Cotton, as contraband. 

See: Contraband cotton. 
Cotton crop, importance and 
distribution of exports, 
113. 

declared non-contraband 
by England, 137, 139. 
acquiescence by 
France, 140. 

difficulty of shipping to 
neutral countries, 134, 
138, 155-159. 

exports, decrease in, dur- 
ing war, 217. 

exports to England by 
months, 115. 

exports to Germany by 
months, 117, 145. 

farmer, economic depend- 
ence of, 135. 

fear that it would be de- 
clared contraband, 132. 



Cotton, financial problems 
and solution, 166. 
German supply of, 162. 
prices, British buyers buy 

at depressed, 144, 145. 
prices, during July, '14, 
114. 
August-October, '14, 

118. 
November-April, '15, 

147. 
April- July, '15, 161. 
importance of, to South, 

112. 
valorization of, by Great 
Britain, 167. 

Dacia, case of, 125. 
Declaration of London, ac- 
cepted by British with 
modifications, 23. 
accepted by Teutons, re- 
jected by Allies, 10. 
contraband lists of, 10, 21. 
necessity for its accept- 
ance by belligerents, 17, 
309. 
origin of, 7. 

rights of conditional con- 
traband to move via 
neutral ports, 24. 
this right abolished 
by August Order in 
Council, 26. 
urged on belligerents by 
U. S., 9. 
Declaration of Paris, cited 
in our March 30 note, 
91. 
Denmark, British control of 
U. S. exports to, 101, 
102. 
Denver, Mallory Line ship, 
founders in mid-ocean, 
124. 
Detentions by England, list 
of, 53. 



334 



INDEX 



Dutch Government, handles 

exports for Holland, 29. 

Dyes, American exports of, 

to England, 246. 

British permission for 

limited imports of, 250. 

ceasing of shipments of, 

249. 
coal-tar, process of mak- 
ing, 244. 
German restriction of our 

supplies of, 247. 
our dependence on Ger- 
many for, 244, 245, 250. 
Dyestuffs, sent in return for 
cotton, 137. 

Economic power of Eng- 
land, 221. 

"Economic pressure," fal- 
lacy of, 290. 

Economic war, nature of, 4. 

Egyptian cotton preferred 
by England, 133. 
moves to Germany, 163. 

Embargoes on exports to 
Germany, forced on 
neutrals, 51. 
re-export, forced on Euro- 
pean neutrals, 28. 

Embargo on exportation of 
cotton by Denmark, 140. 
on re-exportation of cop- 
per, by European neu- 
trals, 188. 
on re-exportation of cot- 
ton by Holland, 131. 

Emigration, German, growth 
and decline of, 268. 

English Channel, neutral 
ships intercepted when 
passing, 16. 

Explosives, importance of, 
in this war, 291. 
U. S. contracts for, 292. 

Exports of ammunition. 
See: Munitions exports. 

Exports of U. S., by months, 
210. 



Exports of U. S., by main 

groups, 212, 217. 
distorted by European 

War, 211, 217, 218. 
Export trade, German, 

growth of, 269. 

Farmer, prosperity of, 33. 
Federal revenues. 

See: Revenues, Federal. 
Fertilizer, German shortage 
of, and substitutes, 284. 
Flags, neutral, misuse of by 

belligerents, 77. 

Flour, exports of, August 

1-May 31, 34. 

prices of, during war, 34. 

Fodder, German measures 

to meet lack of, 277, 279. 

Food, increase in exports 

of, 212. 
Forage, increase in exports 

of, 214. 
Foodstuffs, right to move to 
Germany via neutrals, 
24. 
rights of, under interna- 
tional law, 19, 37, 39, 43. 
British admission re- 
garding, 57. 
Later British position, 
82. 
rights of, under Declara- 
tion of London, 21. 
Foreign Office, British, press 
statement on meat de- 
tention, 95. 
Foreign Trade Advisers, fa- 
cilitate movement of 
goods through. British 
blockade, 255. 
France declares rice contra- 
band in war with China, 
1885, 39. 
Free list of Declaration of 
London, 10. 

Gans S. S. Co., steamers of, 
held up by England, 49. 



INDEX 



335 



Gardner, offers American 
copper producers agree- 
ment with Admiralty, 
192. 

Genet, E. C, Thomas Jef- 
ferson's letter to, 223. 

Gerard, Ambassador, esti- 
mates of, regarding 
German cotton con- 
sumption, 164. 

German Ambassador, 
See : Bernstorff. 

German Confiscation Decree, 
affecting grain and flour, 
61. 
modification, 63. 

Grain, difficulty in export- 
ing, in early months of 
war, 31. 
vessels diverted to British 
ports early in war, 20. 

Granville, Lord, protests 
when France declares 
rice contraband, 39. 

Greenbriar, first American 
ship to reach Bremen, 
123. 

Grey, Sir Edward, instructs 
British delegation to 
vote against contraband 
lists, 183. 
speaks of mild October 
Order in Council, 44. 

Hague Conventions, not all 
ratified, 8. 

Hamburg, fortifications of, 
according to British, 69. 

Hartlepool, bombardment 
of, 69. 

Hay, John, instructions to 
U. S. Ambassador at 
St. Petersburg regard- 
ing rights of neutrals, 
42. 

Holland-American Line ap- 
pointed by England to 
carry U. S. imports 
from Germany, 256. 



Holland-American Line ac- 
cepts shipments only 
for Netherlands Oversea 
Trust, 29. 

stoppage of steamers of, 
by British, 175. 
Holland, British measures 
regarding copper ex- 
ports to, 174. 

foodstuffs prevented from 
reaching, in August, 
1914, 28. 

U. S. exports to, cited in 
British note of January 
7, 55. 

cited in British May 21 
statement, 96. 

Imports from Germany, ef- 
fect of March Order in 
Council upon, 252. 

Imports, German, effect of 
stoppage upon our Fed- 
eral revenues, 261. 
of U. S. by months, 210. 

"Industrial nations," com- 
parison of England and 
Germany as, 266. 

Insurance, hull and cargo, 
interferes with cotton 
exports, 121. 
Marine, affecting cotton 

movement, 121, 122. 
War Risk. 
See: War Risk Insurance. 

Italian Ambassador certifies 
copper shipments for 
Italy, 202. 

Italy's need for much cop- 
per, 189, 194, 203. 

Japan, hypothetical war 
with, 105. 

Jefferson, Thomas, on need 
of trading with both 
belligerents, 19, 107. 
letter to E. C. Genet, 223. 

Johnson, Cone, issues state- 
ment on cotton, 133. 



336 



INDEX 



Kina, S. S., allowed to sail 
after March 31, 154. 

Krupp, invents substitute 
for copper, 208. 

Lansdowne, Lord, on the 
illegality of stopping 
foodstuffs shipments, 
110. 
position on declaring cot- 
ton contraband, 149. 
protest against Russian 
seizure of cargo of food- 
stuffs in 1904, 41. 

Law, international, nature 
of, 1. 

Leather goods, increase in 
exports of, 215. 

Liverpool Cotton Exchange 
forces American mem- 
bers to sign agreement, 
160. 

Lusitania horror, 15. 

London, Declaration of. 
See: Declaration of Lon- 
don. 

Matamoros cases, 178. 

Matanzas, American steam- 
er, sails to get German 
dyes, 248. 

Maxim, Hudson, says cot- 
ton not necessary for 
explosives, 163. 

Maximum prices established 
by German Government, 
273. 

Meat products, increase in 
exports of, 213. 

Meat steamers detained, 49, 
50, 94. 

Mines, discontinuance of 
their use at sea sug- 
gested, 80, 81. 

Mines in North Sea, effect 
of, 8. 
North Sea declared a mine 
area by England, No- 
vember 2, 142. 
vessels lost through, 142. 



Mississippi Supreme Court, 
session of, in overalls, 
136. 
Modifications of Declaration 
of London by August 
Order in Council, 23. 
Morality and international 

law, 3. 
Motorcycles, difficulty of ex- 
porting to neutrals, 231. 
Munitions, dependence of 
Allies on U. S. for, 210. 
exports, ethics of, 302. 
extent of, to Allies, 

307. 
German practice re- 
garding, 297, 301. 
legality of, 301, 304. 
proposed prohibition 
of, 294, 297-300, 
306. 
our advantage in, 305. 
increase in exports of, 212. 
material for making, in- 
crease in exports of, 216. 

"National Safety" as an ex- 
cuse of belligerents, 55, 
79, 91. 

Neches, seizure of, protested 
by U. S., 260. 

Answer by England, 
261. 

Netherlands Oversea Trust, 
certifies U. S. imports 
from Germany, 258. 
formation of, 29. 

Neutral European ports, im- 
possibility of trading 
with Germany via, 12, 
254. 

Neutral ports, right to ship 
to Germany via, 178, 
180. 

Neutral rights defined, 6, 7. 

Neutral steamship lines, re- 
fuse to carry U. S. im- 
ports from Germany, 
252. 



INDEX 



337 



Neutrality, American, vio- 
lated by ceasing to 
trade with Germany, 16, 
19, 39, 88, 168, 259, 290. 
North Sea mining unpro- 
tested, 8, 9. 
Note, American, on October 
22 to England, 200. 

American, protesting 
against Britain's inter- 
ference with commerce, 
December 26, 53. 

American, to Germany on 
February 15, protesting 
War Zone, 77. 

American, to England on 
February 15, protesting 
stoppage of Wilhelmina, 
67. 

American, to Germany 
and England on Feb- 
ruary 20, 80. 

American, to England on 
March 5, inquiring about 
blockade, 84. 

American, to England on 
March 30, protesting 
against blockade, 87. 

American, to England, 
July 14, protesting 
against prize court de- 
lays, 99. 

American, to England on 
July 15, protesting 
seizure of S. S. Neches, 
260. 

Austrian, to U. S., July, 
1915, protesting ammu- 
nition exports, 300. 

British, January 7, an- 
swering our December 
26 protest, 54. 

especial reference to 
copper, 201. 

British, February 10, an- 
swering ours of Decem- 
ber 26, 76. 



Note, British, February 10, 
answering our December 
26 protest, 54. 

British, February 19, an- 
swering our Wilhelmina 
protest, 68. 

British, answering our 
joint note to England 
and Germany of Feb- 
ruary 20, 81. 

British, to U. S. A. on 
March 15, enclosing 
blockade Order, 85. 

British, to U. S. A., July 
23, answering March 30 
note, 89. 

British, to U. S. A., of 
July 31, answering our 
protest of July 14, 100. 

British, to U. S. A., on 
July 31, answer to our 
Neches note, 261. 

German, October 10, pro- 
testing against British 
procedure at sea, 38. 
American answer, 39. 

German, to U. S. A., Feb- 
ruary 16, answering 
War Zone protest, 78. 
Reference therein to 
ammunition exports, 
298. 

German, answering our 
joint note to England 
and Germany of Feb~ 
ruary 20, 80. 

Oil, German substitutes for, 

287. 

Oil, German supply of, 286. 

Order in Council of August 

20 and its result, 10, 11. 

of October 29, terms and 

effect of, 13, 44. 
of March 11, terms of, 85, 

253. 
of March 11, modification 
of, 152, 158, 254. 



338 



INDEX 



Order in Council of March 
11, effect upon imports 
from Germany, 252. 
of March 23, effect of, 72. 
of March 23, operation of, 
with regard to cotton, 
155. 
Organization, German indus- 
trial, effectiveness of, 
288. 
Oversea Trust, Netherlands. 
See: Netherlands Oversea 
Trust. 

Packers, statement of, re- 
garding British deten- 
tion of provisions, 97, 
99. 

Page, Ambassador, cables 
on February 2, that 
grain and flour for Ger- 
many are contraband, 
64. 

Paris, Declaration of, 7. 

Patterson, A. M., U. S. 
agent of British Gov- 
ernment in wool trade, 
237. 

Peace movement, enlighten- 
ing effect of, 2. 

Petroleum declared absolute 
contraband, 286. 
See also: Oil. 

Phosphate, German substi- 
tute for, 285. 

Piracy, early practices of, 
1. 

Population, British, growth 
and support of, 267. 
German, growth and sup- 
port of, 265. 

Potash, American imports 
of, 239. 
effect of shortage of, 243. 
embargo on, by Germany, 

241. 
proposed shipment of 3 
cargoes of, 241. 



Potash Syndicate, contracts 
with, 240. 

Prices of wheat and flour, 
investigation of, 35. 
maximum, established by 
German Government, 
273. 

Prisoners, Russian, aiding 
German harvest, 281. 

Prize courts, British, power 

of, 13. 

British, delay in disposing 

of detained copper, 190. 

British, proceedings in 

meat cases, 50, 94, 99. 
Russian, Lord Lans- 
downe refuses to accept 
j udgment of condemn- 
ing foodstuffs, 42. 

Proof, burden of, placed 
upon captured, by Oc- 
tober Order in Coun- 
cil, 46. 

Public opinion, force of, 2. 

Ramsay, Sir William, on 
cotton as contraband, 
147. 

Re-export embargoes. 
See: Embargoes, re-export. 

Retaliation by belligerents, 
discussion of, 71. 

Retaliation measures, dis- 
cussion of, 26. 

Revenues, Federal, affected 
by decreasing German 
imports, 15, 258, 261. 

Rights of belligerents. 
See :Belligerent rights. 

Rights of neutrals. 
See: Neutral rights. 

Rockefeller Commission, 

purchases of, 33. 

Roumania, wheat exports to 
Germany, 282. 

Russia's seizure of food 
cargo protested by Lord 
Lansdowne in 1904, 41. 



INDEX 



339 



Russia, wheat exports to 

Germany, 283. 
Rubber, Brazilian, difficulty 
of importing, 230. 

conditions under which it 
may be imported, 228. 

declared absolute contra- 
band, December 23, 232. 

declared conditional con- 
traband on September 
21, 226. 

embargo on, lifted by 
England, 228. 

export embargo on, in 
British empire, 226. 

German stock of, 234. 

reference to, in British 
January 7 note, 228. 

trade with neutrals im- 
paired by British meas- 
ures, 231. 
Rubber Club, requests cus- 
tomers not to export to 
Germany, 229. 
Rubber Club, statement of, 
regarding situation in 
rubber trade, 226. 

Salisbury, Lord, position re- 
garding shipment of 
foodstuffs during Boer 
War, 41, 54. 

Saltpeter, German substitute 
for, 284. 

Scandinavia, exports to, 
cited in British note of 
January 7, 55. 
large U. S. trade with, 
cited in British state- 
ment of May 21, 96. 

Schwab, C. M. 

See: Bethlehem Steel. 

Scott, Sir William, quoted 
with regard to leisurely 
prize court proceedings, 
190. 

Sering, Prof., letter to, 276. 

Shells. 
See: Explosives. 



Shipping, American, inade- 
quate for foreign trade, 
29, 123. 
German, proposed pur- 
chase of, 125, 128. 

Ship Purchase Bill, 128. 

Smith, Hoke, has commit- 
tee appointed in Senate 
to further cotton ex- 
ports, 136. 

Smuggling trade with Ger- 
many, 281. 

South America, proposed 
government line to, 130. 
purchasing power of, 
crippled, 211. 

Sovereignty, American, 

threatened by activity 
of British officials, 223. 

Spring-Rice, announces 

blockade on March 1, 
84. 

Steamship lines, pressure on, 
by Great Britain, 27. 

Steamers, with packing- 
house products, held up 
by British, 49. 

Stone, Senator, complains of 
munitions exports to 
Allies, 297. 

Stowell, Lord, cited on 
prize court procedure, 
100. 

Submarines. 
See: War Zone. 

Sugar, increase in exports 
of, 214. 

Sweden, copper for, de- 
tained by England, 182. 

Swine, reduction in number 
of German, 277. 

Textile Alliance, U. S. agent 
of England in wool 
trade, 236. 

Textile Alliance, obtains 
from England pass for 
two cargoes of dyes, 251. 



340 



INDEX 



Textile manufacturers, in- 
crease in exports of, 
215. 

"To order" copper ship- 
ments forbidden by 
Italian and Scandina- 
vian steamship lines, 199. 

"To order" shipments, meth- 
od of, 48, 197. 

"To order" shipments to 
neutrals prevented, Oc- 
tober 29, 13, 197. 

Trade Advisers, Foreign. 
See: Foreign Trade Ad- 
visers. 

"Trading with enemy" pre- 
vented by belligerents, 
221. 

Walsh, Senator, distributes 
credit for starting cot- 
ton movement, 138. 

War Risk Insurance of 
various governments, 
121, 123. 

War Risk Insurance, need 
of, 114. 

War supplies, increase in 
exports of, 216. 

War Zone, German, British 
retaliate for, 150. 

War Zone, German, an- 
nounced by Germany, 
14. 

War Zone Decree, German, 
origin of, 77. 



Wheat, exports of, August 
1-May 31, 34. 

exports, to Germany from 
Roumania and Russia, 
282. 

prices, course of, during 
war, 32. 
Wilhelmina, Belgian Com- 
mission offers to buy 
cargo of, 64. 

cargo, British suggest un- 
loading, 72. 

case, settlement of, 74. 

origin of shipment, 59. 

seized by British, 66. 

shipment, reception by 
British public, 60. 
Wilson, President, heads 
"Buy-a-bale" movement, 
136. 

Wool, American, export of, 
prevented by England, 
237. 

declared absolute contra- 
band, 238. 

embargo on, in Great 
Britain, 235. 

embargo lifted, 236. 

U. S. imports of, 234. 
Work, B. G., goes to Eng- 
land re rubber, 227. 

X-ray used to search cotton 
bales, 141. 



Printed for the Yale University Press 
by E. L. Hildreth 



ul -i \m 



Deacidified using the Bookkeeper process. 
Neutralizing agent: Magnesium Oxide 
Treatment Date: u w 2001 

PreservationTechnologies 

A WORLD LEADER IN PAPER PRESERVATION 

111 Thomson Park Drive 
Cranberry Township, PA 16066 
(724)779-2111 



